1. Explain the meaning, definition and characteristics of culture. Meaning of Culture: Culture from the Latin word Cultura stemming from colere meaning “to cultivate”, generally refers to patterns of human activity and the symbolic structures that give such activities significance and importance. Cultures can be understood as a system of symbols and meanings that even their creators contest, that lack fixed boundaries, that are constantly in flux, and that interact and compete with one another. Culture refers to the following Ways of Life, including but not limited to: Language: the oldest human institution and the most sophisticated medium of expression. Arts & Sciences: the most advanced and refined forms of human expression. Thought: the ways in which people perceive, interpret, and understand the world around them. Spirituality: the value system transmitted through generations for the inner well-being of human beings, expressed through language and actions. Social activity: the shared pursuits within a cultural community, demonstrated in a variety of festivities and life-celebrating events. Interaction: the social aspects of human contact, including the give-and- take of socialization, negotiation, protocol, and conventions. Definition of Culture: Culture can be defined as all the ways of life including arts, beliefs and institutions of a population that are passed down from generation to generation. Culture has been called „the way of life for an entire society‟. As such, it includes codes of manners, dress, language, religion, rituals, games, norms of behavior such as law and mortality and system of belief as well as the art. Cultural anthropologists most commonly use the term culture to refer to the universal human capacity and activities to classify, codify and communicate their experiences materially and symbolically. Scholars have long viewed this capacity as a defining feature of humans. Culture is manifested in human artifacts and activities such as music, literature, lifestyle, food, painting and sculpture, theater and film. Although some scholars identify culture in terms of consumption and consumer goods, anthropologists understand culture to refer not only to consumption goods, but to the general processes which produce such good and give them meaning, and to the social relationships and practices in which such objects and processes become embedded. For them, culture thus includes art, science as well as moral systems. Various definitions of culture reflect differing theories for understanding, or criteria for evaluating human activity. Taylor in 1874 described culture as “culture or civilization, taken in its wide ethnographic sense, is that complex whole which includes knowledge, belief, art, morals, law, custom, and any other capabilities and habits acquired by man as a member of society. More recently, the United Nations educational, scientific and cultural Organization (UNESCO) described culture as “culture should be regarded as the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs. In 1952, Alfred Kroeber and Clyde Kluckhohn compiled a list of 164 definitions of culture in Culture: A Critical Review of Concepts and Definitions. These definitions and many others provide a catalog of the elements of culture. The items catalogued each have an existence and life line of their own. They come into space time at one set of coordinates and go out of it another. In Science of Culture (1949), he concluded that they are objects “sui generis”, that is of their own kind. In trying to define that kind, he hit upon a previously unrealized aspect of symbolization, which he called ”the symbolate”- an object created by the act of symbolization. He thus defined culture as “symbolates understood in an extra- somatic context”. The key to this definition is the discovery of the symbolate. Culture is a shared, learned, symbolic system of values, beliefs and attitudes that shapes and influences perception and behavior -- an abstract "mental blueprint" or "mental code must be studied "indirectly" by studying behavior, customs, material culture (artifacts, tools, and technology), language, etc. Culture is the system of shared beliefs, values, customs, behaviors, and artifacts that the members of society use to cope with their world and with one another, and that are transmitted from generation to generation through learning. Culture is the integrated pattern of human knowledge, belief, and behavior that depends upon the capacity for learning and transmitting knowledge to succeeding generations. Culture is a shared, learned, symbolic system of values, beliefs and attitudes that shapes and influences perception and behavior -- an abstract mental blueprint or mental code. Culture is the totality of socially transmitted behavior patterns, arts, beliefs, institutions, and all other products of human work and thought. Characteristics of Culture: The characteristics of culture are: 1. Culture is learnt: The members of a culture share certain ideals, which shape their lives. Generations learn to follow these ideals and principles. Culture propagates through generations, which adopt their old customs and traditions as a part of their culture. The ideals they base their lives on is a part of their culture. Culture is learned, understood and adopted by the younger generations of society. No individual is born with a sense of his/her culture. He/she has to learn it. 2. Culture is shared: Every culture is shared by a group of people. Depending on the region they live in, the climatic conditions they thrive in and their historical heritage, they form a set of values and beliefs. This set of their principles of life shapes their culture. No culture belongs to an individual. It is rather shared among many people of a certain part of the world. It belongs to a single community and not to any single human being. 3. Culture is transgenerational: Cultural values are imparted from one generation to another, thus resulting in a continual of traditions that are a part of culture. The language, the literature and the art forms pass across generations. 4. Culture is inter-related: Studies have brought out a fact that no culture can remain in isolation. There is hardly any social community that is completely isolated from the rest of the world. Every culture hence is mostly influenced by cultures of the surrounding regions. Cultural values are prone to be affected by the values of communities in close vicinity. The cultures, which emerged during the same periods of time often, show certain similarities. Modern times have witnessed intermix of cultures. Cultures are blended together giving rise to shared cultures. 5. Culture is symbolic: A concept used in the social sciences to draw a contrast between culture and the distinctively human realm of symbolic culture. The concept of symbolic culture draws from semiotics, and emphasizes the way in which culture is mediated through signs and concepts. The concept of the symbolic nature of culture was popularized in anthropology by Clifford Geertz. 6. Culture is patterned: Culture is integrated and possesses culture. A change in one aspect causes a change in the other aspect of culture. 7. Culture is adoptive: Culture is dependant upon the human availability to adapt to change. 8. Culture is descriptive: Different boundaries can be defined with the help of culture. 2. Describe the organizational Characteristics of MNCS. Multinational Corporation is a corporation or enterprise that manages production or delivers services in more than one Country. The first modern MNC is generally thought to be the Dutch East India Company, established in 1602. Very large multinationals have budgets that exceed some national GDPs. Multinational Corporations can have a powerful influence in local economies as well as the World Economy and play an important role in International Relations and Globalization. In a highly competitive World, companies seek to reduce their costs as much as possible. The prospect of a foreign company setting up in a Country where labor is cheap is attractive both for the company and a host Country‟s Government. Many MNCs are large in relation to the national income of the countries in which they are located. This means that it is not as easy for the host Governments to enforce national law on MNCs. Generally speaking, Governments want investment from these MNCs because they generate jobs and incomes. Other benefits include training of local workers in new and potentially transferable skills. Technology transfer is also an incentive. Horizontally integrated multinational corporations manage production establishments located in different Countries to produce the same or similar products. Vertically integrated multinational corporations manage production establishment in certain Country/Countries to produce products that serve as input to its production establishments in other Countries. Diversified multinational corporations manage production establishments located in different Countries that are neither horizontally nor vertically nor straight, nor non-straight integrated. The characteristics of MNCs are as under: a. Organizational Structure: An organizational structure is mostly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim. Organizations are a number of clustered entities. The structure of an organization is usually set up in one of a variety of styles, dependant on their objectives and ambience. The structure of an organization will determine the modes in which it shall operate and will perform. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities. Ordinary description of such entities is a branch, site, department, work groups and single people. Contracting of individuals in an organizational structure normally is under timely limited work contracts or work orders ort under timely unlimited employment contracts or program orders. Organizational structure types: Pre-bureaucratic structures: Pre-bureaucratic (entrepreneurial) structures lack standardization of tasks. This structure is most common in smaller organizations and is best used to solve simple tasks. The structure is totally centralized. The strategic leader makes all key decisions and most communication is done by one on one conversations. It is particularly useful for new business as it enables the founder to control growth and development. They are usually based on traditional domination or charismatic domination in the sense of Max Weber‟s tripartite classification of authority. Bureaucratic structures: Bureaucratic structures have a certain degree of standardization of tasks. They are better suited for more complex or larger scale organizations. They usually adopt a tall structure. Then tension between bureaucratic structures and nonbureaucratic is echoed in Burns and Stalker distinction between mechanistic and organic structures. Post-Bureaucratic: The tem of post bureaucratic is used in two senses in the organizational literature: one genetic and one more specific. In the generic sense the term post bureaucratic is often used to describe a range of ideas developed since the 1980s that specifically contrast themselves with Weber‟s ideal type bureaucracy. This may include total quality management, culture management and the matrix organization amongst others. Functional Structures: The functional structure groups employees together based upon the functions of specific jobs within the organization. Matrix Structure: Matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An example would be a company that produces two products, product „a‟ and product „b‟. Matrix structure is the most complex of the different organizational structures. It can be of these types: Weak/Functional Matrix: A project manager with only limited authority is assigned to oversee the cross-functional aspects of the project. The functional managers maintain control over their resources and project areas. Balanced/Functional Matrix: A project manager is assigned to oversee the project. Power is shared equally between the project manager and the functional managers. It brings the best aspects of functional and projectized organizations. However, this is the most difficult system to maintain as the sharing power is delicate proposition. Strong/Project Matrix: A project manager is primarily responsible for the project. Functional managers provide technical expertise and assign resources as needed. Among these matrixes, there is no best format; implementation success always depends on organizations purpose and function. b. Characteristics of Formalization: Formalization refers to the rules, policies, procedures and other written documents that organizations produce to regulate behavior and assist in decision making. A study of Japanese and the U.S firms indicated that formalization is of two types: 1. Subjective Formalization: In subjective formalization the goals are undefined and not stated clearly. They do not employ formal means but adopt informal and the cultural ways to get the job done. 2. Objective Formalization: Objective formalization is measured by the number of documents like memos, notices etc handed over to the employees. It consist of precise guidelines. This also includes manuals, operating instructions, policies and agreements. c. Specialization: Specialization is the separation of tasks within a system. Specialization enables the accomplishment of otherwise unattainable goals. It also reduces the ability of individuals to survive outside of the system containing all of the specialized components. There are two types of specializations: 1. Horizontal Specialization: It is an organizational process, whereby a single management function such as recruiting is divided among one or more subordinate. Horizontal specialization usually occurs because growth in an organization requires additional management coordination and control. 2. Vertical Specialization: Vertical specialization is the delegation of responsibilities and duties to others within the same line of authority. Vertical specialization occurs as an organization grows, becoming more complex and requiring additional personnel to cope with the additional workload. d. Centralization: Centralization is the process by which the activities of an organization, particularly those regarding decision making, become more concentrated within a particular location and or group. The features of centralization are: It enables decisions to be made closer to the operational level of work. There is increased responsiveness. There is an improved level of personal customer care. It is more in keeping with developments in flatter and more flexible organizations. Support services, such as administration, are more likely to be effective if provided as close as possible to the activities they are intended to serve. It provides improved opportunities for training in management. Usually, it has an encouraging effect on the motivation and morale of staff. The advantages often claimed for centralization tend to relate to economic and administrative considerations and generally include: The easier implementation of a common policy for the organization as a whole. Providing a consistent strategy across the organization. Preventing sub-units becoming too independent. Making for easier co-ordination and management control. Improved economies of scale and a reduction in overhead costs. Greater use of specialization, including better facilities and equipment. Improved decision-making which might otherwise be slower and a result of compromise because of diffused authority. However, such advantages frequently are not realized fully, and do not lead to an actual improvement in service. 3. Explain the two types of Communication flows. There are two basic types of communication flows: Downward communication & Upward Communication Downward Communication: Communication which flows from the superiors to the subordinates is known as downward communication. In an organization structure, the superiors utilize their abilities to attain the desired targets which mean that they may be engaged in issuing commands, directions and policy directives to the people working under them. Under downward communication, the superiors anticipate instant recital of a job that‟s why it‟s highly directive. Downward Communication can be defined as “Information flowing from the top of the organizational management hierarchy and informing subordinates or lower management what is important (mission) and what is valued (policies)”. Some examples of downward communication include notice, circulars, instructions, orders, letters, memos, bulletins, handbooks, annual reports, loudspeaker announcements and group meetings. Communication from superior to subordinate can be face to face as well as through written memorandums, orders, job descriptions etc. The authority line flows from the top to the bottom according to the organizational structure (hierarchy). It is needed to complete the work at hand, to prepare for changes, to deject lack of understanding and doubt; and to allow the organizational members to develop feeling of pride of being well- informed about all organizational matters. The other elements of downward communication include: Directions to carry out a special task. Job instructions Information intended to create understanding of the task and its relation to other organizational tasks. Response to the subordinate about his performance. Information of ideological character to inculcate a sense of mission. Indoctrination of goals. According to Harris & Moran it is important to include all these factors to convey the message to the subordinates to make certain that the desired message reaches them in a highly effective manner so as it can be executed properly. It should follow and include these. 1. An easy vocabulary and the use of easy words is essential to get the message across. 2. The use of words with alternative meaning should be minimal. 3. Special attention to be paid to the use of grammar. 4. The oral message should be conveyed steadily and not in a quick manner. 5. The use of idioms and the like should be restricted and eliminated. 6. The message should be free of all slangs. 7. The message should be conveyed in such a manner that it does not require the listener to have mental images of the words spoken. 8. It has also been proved that the message is more effective if it is in the language that is well spoken amongst the listeners. 9. It always helps top repeat the message as many a times as possible. 10. Lastly, it proves effective to ask them to explain what has been spoken. Upward Communication: "The communication flowing from subordinates to superiors, usually concerning employees‟ comments about themselves, their reactions about others, their reactions to practices and policies, and their thoughts about their work." The following steps make certain that the lines of communication are open and are feasible and a free flow of communication is maintained within the organization. General manager‟s routine staff meeting with supervisors: In addition to production issues, these staff meetings should also include topics of interest to employees with respect to business developments, company affairs, and any other topics that and any other topics that should be communicated by supervisors to rank and file. General Manager‟s routine meeting with non-supervisory employees: In addition to production issues, these meetings should emphasize issues that involve pay and benefits, problems, complaints, rumors, and questions. Supervisor‟s routine meeting with employees: Upper management should ensure that supervisors have routine meetings that cover topics beyond production that are of interest to employees. In many environments, there is a tendency for supervisors to overlook these important communications vehicles while under pressure to produce. Employee newsletter for home delivery: The spouse should become involved in events and conditions to give the entire family a stake in and appreciation of the employee‟s job. Newsletters for supervisors: Subscriptions to appropriate newsletters that provide supervisors with information on how to do their jobs better and how to handling employees and job problems. Or create a regular supervisor newsletter internally. Bulletin board program: Every attempt should be made to make the bulletin board a viable source of information—in most cases bulletin boards fall into disuse. Employee handbook: Handbooks should be published in an attractive, easy-to-use format so that they are readily usable by employees as a source of information. Supervisor‟s handbook: This document can serve as a training aid as well as communication tool. The importance of free-flowing forthright communications, both downward from management to employees and upward from employees to management, can hardly be overemphasized. Whether it‟s to support morale and productivity among the workforce or to assure that management takes advantage of employee input, good communications are essential. Where downward communication is poor, rumors and misinformation will fill the vacuum. Where upward communication is poor, employee grievances will fester driving down morale and productivity and increasing vulnerability to union organizing. All the above vehicles are effective. But more important than any specific vehicle for upward or downward communication is the commitment by top management—and the supervisory staff—to the ongoing importance of communication to the success of the business mission. This must be implemented through regular, consistent effort by management at all levels. 4. Write a detailed note on leadership practices around the globe. Leadership is the process of guiding the behavior of others toward an organization's goals. Guiding, in this context, means causing individuals to behave in a particular manner or to follow a specific set of instructions. Ideally, the behavior exhibited is perfectly aligned with such factors as organizational goals, culture, policies, procedures, and job specifications. The main goal of leadership is to get things done through other people, making it one of the main activities that can enhance the management system. It is accomplished to a great degree through the use of effective communication. Because leadership is a prerequisite for business success, to be a successful business manager one must have a solid understanding of what leadership includes. Indeed, such issues as the increased capabilities afforded by enhanced communication technology and the rise of international business have made leadership even more important in today's business environment. The following sections describe the major theories underlying the most commonly accepted management/leadership practices and the concepts they are based on. Based on the work of psychologists, organizational theorists, and human relations specialists in the 1960s and 1970s, two distinct assumptions, called Theory X and Theory Y, evolved about why and how people work for others. Theory X posits that people do not like to work and will avoid doing so if the opportunity presents itself. Because of this, most people need to be coerced into completing their required job duties and punished if they don't complete the quantity of work assigned at the level of quality required. Again, because of their dislike for work, most people do not want responsibility, prefer to be directed by others, and have little ambition; all they want is job security. With an almost completely opposite perspective, Theory Y posits that people like to work and see it as a natural event in their lives. Therefore, punishment and threats are not the only means of motivating them to complete work assignments. People are willing to work hard for an organization; indeed, they will use self-direction and control to work toward goals that are understandable and communicated clearly. In this theory of human behavior and motivation, people are seen as seekers of learning and responsibility who are capable of and willing to be engaged with creative problem-solving activities that will help the organization reach its goals. According to Theory Y, leaders need to develop ways to expand the capabilities of their workers so that the organization can benefit from this significant potential resource. Japanese Leadership: In the decades since the end of World War II, business leaders around the world have marveled at the ability of Japanese managers to motivate and successfully lead their subordinates to levels of outstanding performance in terms of both the quantity and quality of production. Therefore, Japanese approaches to management and leadership have been studied intensely to find similarities and differences between local practices and theirs. Among the approaches that have been cited as contributing to Japanese success are the following: Japanese corporations make the effort to hire employees for a lifetime, rather than a shorter period of time. This helps workers to feel a close relationship with the organization and helps build employee ownership of the organization's success. Employees are elevated to a level of organizational status equivalent to that of management by leveling the playing field with regard to dress, benefit packages, support services/amenities, restrooms, stock ownership plans, and so forth. Employees are shown that they are valued and a critical part of the company. This is done by having ceremonies to honor employees, providing housing at nominal cost to employees, having facilities for social activities that are sponsored by the organization, offering competitive salaries, and so forth. A significant effort is made to build positive and strong working relationships between leaders and their subordinates. This includes making sure that leaders take time to get to know their employees and become cognizant of their main concerns. Such a relationship can have a marked impact on the extent to which employees value the organization and their leaders. There is collective responsibility for the success of the organization. Individual accountability is downplayed to the climate that prevails in U.S. organizations. Implied control mechanisms are based on cultural values and responsibility. Non specialized career pathways are typical. Employees work in a number of job categories over the course of their tenure so that they can gain a broader sense of the nature of all the work that is done in the organization. There is a holistic concern for the welfare of every employee. Organizations and their leaders take the time to assist employees with personal issues and work opportunities. The Japanese are generally concerned with how the company performs and how individual work groups perform rather than how an individual performs. Therefore, incentives for individuals are less likely to be effective than incentives associated with the performance of a work group or of a whole unit. In addition, Japanese leaders and workers focus much less on monetary rewards than on esteem and social rewards. Another major development in the manufacturing and handling of goods was developed in Japan. This development was kanban, or what we know as the just-in-time (JIT) inventory and materials handling system. In this system managers/leaders locate high-quality suppliers within a short distance of their operations. They also establish specific quality standards and delivery requirements, as well as materials handling procedures that these suppliers are contractually obligated to adhere to. Although these techniques have proven to be successful in Japan, attempts to duplicate them in another culture may have disappointing results. The importance of cultural mores cannot be underestimated. What may work in Japan, France, or the United States may not work anywhere else simply because of cultural factors. Yet Japanese management/leadership principles have taught managers around the world to consider new approaches in order to achieve the higher standards of organizational effectiveness necessary in today's global economy. Business leaders around the world are examining their practices in light of the success that the Japanese and others have had in the areas of strategy building, organizational development, group/team cooperation, and establishing competitive advantage. Leadership in China: The emergence of China as a major global economic force has put the world on notice. A culture steeped in tradition finds itself grappling with what shaped its past and what forces its future. Its rapid economic growth—at a rate of 8 percent a year, compared to 3 percent in the United States—has come with a price. China‟s growth has dramatically stretched an already aging labor supply, fueling intense competition for talent. Turnover rates continue to rise as workers, their skills in demand, hold more bargaining power. While an economic juggernaut now and for the near future, China might not be able to sustain its newfound stature in the face of such challenges. While organizations around the world face the challenge of finding leaders, cultural factors are compounding that task in China. The continuing transformation of its economy means Chinese business leaders must possess a skill set that blend new ways with the old. Leadership in China has long been based on a foundation of mutual respect and a feeling of connectedness among individuals. However, to compete globally, China‟s new leaders need leadership qualities that reach across nations and cultures. Those organizations that are able to find, develop, and retain leaders who can perform at high levels while constantly adapting to a changing society not only ensure their continued success but also will realize a competitive advantage. Today‟s leaders in China face a unique challenge: On the one hand, they know they need to adapt to the demands of a global market if they want their organizations to compete and succeed. On the other hand, they must respect cultural traditions. These traditions include the concept of guan xi, which teaches the relatedness or connections among individuals. Furthermore, Chinese culture has been heavily influenced by the teachings of the great philosopher, Confucius, who stressed the value of the thoughtful man, learning through mistakes while consciously respecting tradition and values. Considerable insight into the Chinese leadership ethic can be found in a comprehensive study of cultural influences in the workplace conducted by Geert Hofstede. Hofstede‟s study analyzed data from more than 70 countries spanning six years. The results showed that China had ranked the highest in “long-term orientation,” a finding consistent with the high value the Chinese place on patience and perseverance and the relatively low value they place on aggressively acting for the sake of taking action. The study also found that “feelings of individualism” was ranked lower in China than in other countries. The data from the study underscored the traditionally accepted perceptions of leadership in China; yet China‟s important role in a global economy means that the country‟s traditional ideals of leadership will be forced to adapt if it‟s to compete successfully in an increasingly international marketplace. Skills that were once viewed as primarily Western in importance (and, therefore, not necessarily relevant within Chinese culture) are now found to be critical to the success of leaders in China too. For instance, leaders now are expected to be coaches who can guide the development of their teams. Leadership styles and skill levels in China are very much a reflection of Chinese culture itself; thus, culture might have implications for how Chinese leaders will fare in a fast-growing business environment. Motivating Others: Motivation is closely correlated to employee productivity and retention. In large part it‟s up to leaders to spark a high level of sustained energy and peak performance in people. In the China of tomorrow, it will be critical for the country‟s leaders to leverage employee talent and ensure that every employee fully contributes to meeting organizational goals. Building Trust: While trust is the responsibility of each individual, leaders are the guardians of the “trust environment.” In a workplace where trust is valued, organizations see more teamwork, partnering, and productivity. Without trust, Chinese leaders would have a hard time marshalling their resources and responding to new challenges. Retaining Talent: Chinese leaders need to work to retain the talent that drives team and organizational success. In China‟s competitive labor market, organizations find themselves competing for the best talent while their employees consider going to those organizations that offer the best opportunities. Chinese leaders recognize that talent is the key to long-term success and that they must work hard to find and keep the right people. Leading High-Performance Teams: Though team members‟ attitude and abilities play a critical role in achieving optimal performance, it is the leader who can be the “make or break” factor in a team‟s success. The leader‟s knowledge, skills, and abilities can transform an acceptable team into an exceptional one. In China where relationships are of paramount importance, leaders know they must build relationships among team members and between teams. It is interesting to note that both leader and HR professional ratings yielded the same set of top skills for leaders. Such agreement is a positive sign because it shows that HR professionals understand what it means to be a successful leader in China. Although the relative importance of this set of leadership skills may be unique to China, leaders around the world acknowledge the importance of these same skills. The real difference is in the level of emphasis each culture places on these skills and the current level of leader proficiency. Leadership Approaches in Developing Countries: Relationship Orientation in Leadership: One of the most striking characteristics of leaders in developing countries is that they place great importance in establishing close interpersonal relationships with subordinates as well as people in higher authority. Subordinates expect personalized relationships, protection, close guidance and supervision. Leaders assume responsibility for the followers and in return, they seek loyalty. The interaction between leaders and followers resemble parentchild relationship in developing countries. This prevalent leadership style is referred to as 'paternalism'. The paternalistic relationship is hierarchical, the superior assumes the role of a 'father' who protects and provides for the subordinate, whereas the subordinate voluntarily renders to the superior, and shows loyalty and deference. The leader is assumed to 'know better' for the subordinates. Employee loyalty and deference is manifested in various forms such as engaging in extra-role behavior or working overtime (unpaid) upon the request of the supervisor; not quitting the job (even if one receives a much better job offer) because of loyalty; following the paternalistic superior to another organization if s/he quits the company; not questioning nor disagreeing with the superior in decisions regarding the company or the employee (e.g., performance evaluations, career-planning, etc.); doing personal favors for the superior when needed (e.g., helping him during the construction of his house); putting extra effort in the job and working hard, so not to lose face to the superior. The importance of relations goes beyond organizational boundaries. Leaders are also expected to establish good interpersonal relations with people in higher authority in government, supporting institutions, and negotiation parties. In order to protect the institution and draw political, technical and financial support, leaders invest a substantial amount of time and effort to networking. As such, networking and diplomacy are among the common characteristics of effective leaders in developing countries. Power Orientation in Leadership: Another salient leadership characteristic in developing countries is leader's desire to exercise power. The duality that is difficult to comprehend is that leaders wish to maintain good interpersonal relations with the subordinates on the one hand, and act in an authoritative way on the other. In the context of 'benevolent paternalism', the power is exercised for the benefit of the employee (just like in the family: the father is authoritarian and disciplinarian for the benefit of his children). However, it is also very common that leaders use their status and power for personal benefits (e.g., 'exploitative paternalism'). For instance, high level managers clearly favor their in-group members in personnel decisions such as staffing. Leaders are highly status conscious. They may resist change not to lose power or relinquish authority. They want to remain in power to maintain their and their families' status in society. Despite close and good interpersonal relationships with workers, they demand formality and respect. Workers are strongly discouraged to bypass authority. The decision making process reflects the power inequality. Usually, the process is centralized, and the decisions are made unilaterally. This is partly because the leaders do not want to relinquish power by being participative. Subordinates also expect the leader to be decisive, not only because they trust his wisdom, knowledge and competencies, but also they are afraid of taking risk and responsibility by getting involved in the decision making process. The image of a strong leader is someone who knows it all, and who is a hero and a savior. Sometimes a leader maybe perceived as weak and incompetent if s/he is excessively participative. Instead, they maintain a 'consultative' approach where they consult their subordinates (usually in an informal way), and give the final decision unilaterally. Preferred Leadership Characteristics: Robert J. House and 170 local investigators completed major cross-cultural research on leadership and organizational effectiveness. A total of 62 countries representing all continents participated in this major undertaking, the GLOBE project (Global Leadership and Organizational Behavior Effectiveness http://www.ucalgary.ca/mg/GLOBE/Public). According to the preliminary findings (Hartog, House, Hanges, et al., 1999), the most preferred leadership characteristics in all countries (developing and developed alike) involve charisma, participation, and team integration. In fact, all these leadership qualities are important and relevant particularly for developing countries. The most important characteristics of charismatic/transformational leaders include their emphasis on change and transformation through a strong vision and sense of mission for the organization, intellectual stimulation (i.e., helping followers to recognize problems and solutions), individualized consideration (i.e., giving followers the support, attention, and encouragement needed to perform well), and inspirational motivation (i.e., communicating the importance of the organization's mission and relying on symbols to focus their efforts). Employees in developing countries - especially the young and well-educated generation - seek more participation in the decision-making process. An ideal leader is also a 'team integrator'. As will be discussed in detail in the next section, effective teamwork may be difficult in developing countries. Leaders who are able to overcome the cultural barriers to motivate and mobilize employees to do teamwork are considered to be highly effective. In conclusion, the ideal leader profile in developing countries is: Empowering (able to make people feel that they are powerful). Participative, but also decisive. Trustworthy: Knowledgeable, skillful and administratively competent. Paternalistic and also performance-oriented. Fair and just, especially in interpersonal relationships. Diplomatic. Conscious of status differences, but at the same time modest and humble. Team integrator. Teamwork Some of the socio-cultural characteristics of developing countries may not be elusive to effective teamwork. Relationship-orientation may be perceived as an asset for teamwork, but the nature of relationships and in-group dynamics may hinder effectiveness. The barriers to teamwork effectiveness are outlined in the following. 1. Team formation and member composition: In most of the organizations, team members are appointed on the basis of their task-related knowledge and competencies. However, because of the strong in-group and out-group differentiation in developing countries, it is difficult to persuade people to work with those who are perceived to be an out-group member. In fact, if given the chance to self-select the team members, teams are formed on the basis of friendship relationships. Interpersonal harmony in teams is more important than task accomplishment. As such, team members find it very difficult to work with someone who they 'don't know' or 'don't like'. Members who have the potential to disturb in-group harmony are not wanted no matter how competent they may be. 2. Team cohesion: Teamwork requires egalitarian relationships and cohesiveness. Some status-conscious members may be reluctant to cooperate or share information with others to maintain their powerful position in the team. This not only hurts team cohesiveness, but also delays task completion. Also, in-group rivalry may occur to get the praise and recognition of the superior. To the other extreme, excessive team cohesiveness may easily result in 'group thinking', because some members may be reluctant to voice their disagreements not to risk their position in the team. 3. Performance feedback: Team members who do not perform at the expected level rarely receive negative feedback from others. If a member receives negative feedback, s/he takes it personally and takes offense. Criticisms that are done publicly or that represent a group's opinion are especially hurtful to people's public image and honor. The member who receives such feedback may leave the group immediately and may even try to sabotage the process. It is not appropriate or common for team members to give performance feedback to one another in an open manner. It is also not appropriate to report the low performing team member to the higher management. Such an act of 'whistle blowing' is considered as unethical and immoral. Therefore, often times, the low performing members hide in the group and go unnoticed. 4. Division of responsibility: Social loafing is more likely to occur in teams where there is no consequence of low performance. Team members feel compelled to protect one another from reprimands of the management. Reliance on 'backing up' among team members increases social loafing. Another factor that increases social loafing is the members' need for clear role differentiation and task assignments. Lack of clarity in task assignments may sometimes be used as an excuse not to take on extra responsibility. 5. Evaluation apprehension: Self-representation is an important concern for people in developing countries. Team members may hesitate to participate in group discussions because of the concern on how they are perceived and evaluated by others. Others' perceptions and evaluations are important as they determine whether or not the group accepts or rejects the individual. Evaluation apprehension exists especially when a member has to present a counterargument, or brings a new perspective to the group's attention. This, obviously, is a serious barrier to innovation and creativity in teams. In order to improve teamwork and communication effectiveness in developing countries, the following suggestions could be useful. Teamwork effectiveness is enhanced if there is a leader who is skillful in both maintaining good interpersonal relations and setting high performance standards. Leaderless or autonomous groups are less likely to succeed in a developing country context. Leaders must be sensitive to feelings of insecurity among members. Leaders have to spend considerable time and effort to inculcate feelings of acceptance and indispensability among team members to minimize ingroup rivalry and increase group cohesiveness. In order to decrease uncertainties and social loafing, individual roles and responsibilities should be clearly stated. In addition, team's goals have to be well-defined and articulated clearly by the management. Members will benefit greatly from training in effective teamwork where they will acquire knowledge and skills about performance management and communication in teamwork. Before starting to work together, the team should establish norms on how to handle difficult team members as well as on the ground rules in meetings. Once the group sets these norms jointly and agrees upon the repercussions for violating them, team members who receive negative performance feedback are less likely to take it personally and withdraw from the group. In forming the team, members' compatibility in terms of interpersonal relations should be given special attention. That is not to say that only 'close friends' should work in teams, but it should be remembered that interpersonal conflicts do interfere with effective teamwork functioning. Social activities that will improve interpersonal relationships among team members should be organized to increase cohesiveness. People need time to get to know one another before working together. Team members' performance evaluations should not be done individually. However, poor performers should be monitored through either periodical and anonymous peer evaluations, or careful observations in group meetings. It should be the manager or the team leader who gives the negative feedback in a private meeting. Team success should be rewarded as a group. 5. Give a brief account of doing business around the world. 1. Developing Business in China: Western business visitors are often deadline-driven and unwilling to slow down to the Chinese pace when discussing business. But in China the pace can be fast and slow simultaneously. Those involved in negotiations know how long they can drag on when the Chinese side is consulting internally or has other reasons for delay. But Chinese negotiators can move with lightning speed on other occasions. Part of this feeling is subjective. Any chess player knows how long you have to wait for the other player and yet how fast you must move yourself. Nevertheless, Chinese negotiators use time more consciously than do their Western counterparts. Separate fact from fiction Virtually everything you hear about China is true, and so is the opposite. Western thought is dominated by linear logic whereas Chinese thinking is influenced by early philosophers, who saw a paradoxical balance of opposites in all things. Where Westerners tend to look for clear alternatives (option A instead of option B), Easterners may examine ways to combine both option A and option B. This difference in approach may make a Westerner think that a Chinese negotiator is being illogical, evasive or devious, when he believes he is being quite straightforward. Build relationships Westerners normally build transactions and, if they are successful, a relationship will ensue. However, the Chinese believe that prospective business partners should build a relationship and, if successful, commercial transactions will follow. This difference underlies many misunderstandings arising from business negotiations. Virtually all successful transactions in China result from careful cultivation of the Chinese partner by the foreign one, until a relationship of trust evolves. Cultivate Guanxi The logical development of close relationships is the Chinese concept of guanxi, pronounced gwan shee. According to business analyst Tim Ambler of the London Business School, the kernel of guanxi is doing business through valueladen relationships. In a highly centralized, bureaucratic state, the use of personal contacts was the only way to get things done. Guanxi is the counterpart of a commercial legal system. Where the latter is relatively weak, as in China, the need to rely on guanxi will be strong. As long as the relationship is more valuable than the transaction, it is logical to honor it. The idea of a friendship leading to business is attractive. But Easterners who are familiar with guanxi are more cautious than Western converts. The obligations of guanxi are very real. In the wrong place, at an inappropriate time, with unsuitable people, the obligations can become a trap it is hard to escape. Take care with contracts Chinese and Westerners often approach a deal from opposite ends. To a Westerner, starting with a standard contract, altering it to fit the different circumstances, and signing the revised version, seems straightforward. Commercial law is ingrained in our thinking. But traditionally, commercial law scarcely existed in China and certainly indicated bad faith. The early appearance of a draft legal contract was seen as inappropriate or, more likely, irrelevant, because it carried no sense of commitment. The business clauses might form a useful agenda, but obligations came from relationships, not pieces of paper. Today, returning home with a signed piece of paper is a symbol of progress, but nothing more. The Chinese may be signing a contract to humour their guests. To them, a completed contract may merely be the proof that both sides have grown close enough to develop a trusting relationship. Further concessions may then be requested - a difficult prospect for the Westerner who has shaved his margin down to the bone. Mobilise local assets The challenge of learning to speak Chinese fluently, the complexities of the Chinese way of doing business, and a strong sense of national pride mean that a foreigner will only extremely rarely be accepted by Chinese interlocutors on equal terms. The solution is to find a reliable Chinese ally to work with you. An effective Chinese colleague will often be able to analyze body language at meetings, work out who in the other negotiating team holds real power - not always the boss - and help smooth out any inadvertent wrinkles. Conversely, the presence of a Westerner should be exploited to the full. Chinese interlocutors will often see a visit by a foreigner as an indication of sincerity and commitment by the Western company. Perversely, they often do not accord mainland Chinese or Hong Kong representatives the same status as a foreigner. The ideal sales team, therefore, is often a Chinese to take care of the working level contacts, and a foreigner to do honor to the higher echelons. Respect face Face is an essential component of the Chinese national psyche. Having face means having a high status in the eyes of one's peers, and is a mark of personal dignity. The Chinese are acutely sensitive to gaining and maintaining face in all aspects of social and business life. Face is a prized commodity which can be given, lost, taken away or earned. Causing someone to lose face could ruin business prospects or even invite recrimination. The easiest way to cause someone to lose face is to insult an individual or criticise them in front of others. Westerners can unintentionally offend Chinese by making fun of them in a good-natured way. Another error can be to treat someone as a subordinate when their status in an organization is high. Just as face can be lost, it can also be given by praising someone for good work before their colleagues. Giving face earns respect and loyalty, but praise should be used sparingly. Over-use suggests insincerity on the part of the giver. Accept the pecking order Mao Zedong's thoughts on discipline published in 1966 provide a valuable insight into structures which persist in Chinese organizations even to this day: "The individual is subordinate to the organization. The minority is subordinate to the majority. The lower level is subordinate to the higher level." This quotation, which underlies the way China was governed for over 20 years, indicates why Chinese society and companies are very hierarchically organized, and why Chinese people seem to be more group oriented than individualistic and often do not like to take responsibility. Similarly, people are seldom willing to give an opinion before their peers as it might cause loss of face with a valued ally. 2. Doing Business in Russia: Guide to doing business and investing in the Russian Federation 2008 focuses on the precise concerns of business executives formulating global investment and trading strategies. It provides business people with practical, concise and up-to-date information on how to do business in Russia. Starting with a brief overview of general country information, it offers valuable insight into the Russian economy and business climate, its tax, legal and accounting systems, labor relations. Political changes, government reforms, a stable economy, vast natural resources and a large population have all led to Russia seeing enormous advances in their foreign trade links. However, Churchill's description of the country as a 'riddle wrapped in a mystery inside an enigma' still very much holds true for outsiders looking in. Gaining some basic insight into the Russian mentality, culture and etiquette are key for anyone doing business in Russia. Meeting and Greeting The typical greeting is often a (very) firm handshake with the appropriate greeting for the time of day - dobraye utra (good morning), dobryy den (good afternoon) or dobryy vecher (good evening). Even though it may sound a bit stiff it is commonplace when doing business in Russia to introduce yourself using only your surname. Before meeting your Russian counterpart ensure you find out if there are any titles they use as these are extremely important and should be used. If you are visiting Russia it is appropriate to refer to your counterpart by either "gaspodin" (a courtesy title similar to "Mr.") or "gaspazhah" (similar to "Mrs." or "Miss") plus his or her surname. On the whole Russians have three names. The first name is the given name while the last name is the father's family name. The middle name is a version of the father's first name, known as a patronymic; for a man, it ends with the suffixes "vich" or "ovich" meaning 'son of.' For a woman, the patronymic is also the father's first name but with suffixes "a" or "ova" added, which means 'daughter of.' When doing business in Russia make sure you take a business card. It is always a good idea if you plan to maintain contacts in Russia to have one side translated into Russian. If you do so make sure you add your title and any degrees or qualifications you have. Meetings and Negotiating Always be punctual when doing business in Russia. However do not take offense if your Russian counterpart is not. It is not unknown for Russian business people to turn up hours late. A good indication of how serious a meeting is taken is how punctual they are. Initial meetings are usually approached as a formality. It is at this stage that your credibility will be assessed. The best strategy is to appear very firm and dignified, while maintaining an air of warmth and approachability. Pitches or presentations should be simple and straightforward. Generally Russians are not impressed by foreigners doing business in Russia who use special visuals, flashy PowerPoint presentations and the like. These do not sway decisions. The most critical element is demonstrating your knowledge, professionalism and expertise. Many Russian business personnel speak good English so presenting in the language is not a problem. If it could be then hire a Russian interpreter. It is however that you make the effort to present anything written in Russian. Negotiations are an interesting affair for anyone doing business in Russia. They are tough and like to indulge in a fair amount of theatre if necessary. Their main aim is to gain concessions so there will be a lengthy process of grinding you down. Caving in too early is a sign of weakness so stand your ground. If you do feel the need to concede ask for the gesture to be reciprocated in some way. Generally speaking, Russians view compromise as a sign of weakness. Don't be surprised by loss of tempers, walkouts, threats to end the deal, and similar incidents. It's all part of the fun. 3. Doing Business in India: In such a richly diverse and complex country as India it is difficult to impart generic conclusions that can be used by those doing business there. Regionalism, religion, language and caste are all factors that need to be taken into account when doing business in India. Behavior, etiquette and approach are all modified depending on whom you are addressing and the context in which they are being addressed. However, most of those doing business in India will do so in cities such as Delhi, Mumbai, Bangalore and Hyderabad and with a particular socio-economic class. This short guide to doing business in India will explore a few cultural facts and their influence on business culture and etiquette. These are in no way meant to be an all-inclusive summary on doing business in India but an introduction. Language Different states in India each have different official languages. Central government only recognizes Hindi as the official language of India. However, when doing business in India, English is the language of international commerce. Hierarchy Of all the cultural influences that most impact Indian business culture, hierarchy plays a key role. With its roots in Hinduism and the caste system, Indian society operates within a framework of strict hierarchy that defines people's roles, status and social order. For example, within companies manual labor will only be carried out by the "peon" (roughly equivalent to a 'runner'). It is not uncommon for the moving of a desk to take hours. This is because no-one in the office will carry out the task but the "peon", who, if otherwise engaged can not do so. Meeting and Greeting When doing business in India, meeting etiquette requires a handshake. However, Indians themselves use the namaste. This is where the palms are brought together at chest level with a slight bow of the head. Using the namaste is a sign of your understanding of Indian etiquette. Names speak volumes about an Indian's background. For example, a Singh will always be a Sikh. The suffix "-jee" ( as in Banerjee) is a sign of a high caste. "Kar" (as in Chandraskar) denotes that person is of Maharashtan high caste. Arabic sounding names will be used by Muslims. When addressing an Indian whom you know personally, always use the appropriate formal title, whether Professor, Doctor, Mr, Mrs or if you do not know their names then Sir or Madam will suffice. When doing business in India, business cards should be exchanged at the first meeting. It is a good idea to have it translated on one side into Hindi, more as a sign of respect as opposed to linguistic necessity. Be sure to receive and give with your right hand. Make sure the card is put away respectfully and not simply pushed into a trouser pocket. Building Relationships Doing business in India involves building relationships. Indians only deal favourably with those they know and trust - even at the expense of lucrative deals. It is vital that a good working relationship is founded with any prospective partner. This must take place on a business level, i.e. demonstrating strong business acumen, and at a personal level, i.e. relating to your partner and exhibiting the positive traits of trustworthiness and honour. Meetings and Negotiations Meetings should be arranged well in advance. This should be done in writing and confirmed by phone. Avoid meetings near or on national holidays such as Independence Day, Diwali or either of the two Eids. Avoid the heat by scheduling between October and March. Punctuality is expected, although being 10 minutes late will not have disastrous consequences. Flexibility is paramount. Family responsibilities take precedence over business so last minute cancellations are possible when doing business. When entering a meeting room you must always approach and greet the most senior figure first. Meetings should always commence with some conversation. This is part of the 'getting to know you' process. Favourable topics of conversation are the latest business news, the fortunes of the Bombay Stock Exchange or cricket. Avoid talking about personal matters and, if new to India, do not comment on matters such as the poverty or beggars. If your business dealings in India involve negotiations, always bear in mind that they can be slow. If trust has not yet been established then concentrate efforts on building a rapport. Decisions are always made at the highest level. If the owner or Director of the company is not present, the chances are these are early stage negotiations. Indians do not base their business decisions solely on statistics, empirical data and exciting PowerPoint presentations. They use intuition, feeling and faith to guide them. Always exercise patience, show good character and never exhibit frustration or anger. When negotiating avoid high pressure tactics do not be confrontational or forceful. Criticisms and disagreements should be expressed only with the most diplomatic language. Indian society has an aversion to saying "no" as it is considered rude due to the possibility of causing disappointment or offense. Listen carefully to Indians' responses to your questions. If terms such as "We'll see", "I will try" or "possibly" are employed then the chances are that they are saying 'no'. Once terms have been agreed you will be expected to honour them. 4. Doing Business in France: Doing business abroad brings with it cross cultural challenges. Prior to travelling to another country it is the norm not to consider factors such as differences in etiquette, business practices, negotiation techniques and business protocol. However, it is precisely these areas one should be addressing before doing business abroad if the success of the trip is to be given a better chance. This short manual to doing business in France is offered as an introductory guide to some of the above mentioned areas where cultural differences can impact business proceedings. It is in no way a comprehensive summary of all 'doing business tips' nor meant to stereotype the French. Rather, it highlights some important key areas for consideration when doing business in France. Formality Public life in France can appear quite formal. This is manifest in greetings, manners and the language. When doing business in France, the adhesion to protocol and a formal means of communication can appear stuffy, cold and unfriendly. However, despite appearances, business takes place on two levels. On the surface it appears orderly, professional and uncluttered by personal relationships. Yet, beneath the surface, a complicated network of personal relationships, ties, alliances and factions actually drives things. Language Perhaps no other culture so highly regards its language as a symbol of itself. The French are extremely proud of their language. This pride makes the use of French a sensitive issue. Above all the inability to speak even some French may be counted against you. It is important to at least learn some basic civilities prior to doing business in France. Meetings & Greetings Shake hands when meeting and parting. In social settings with friends kissing is the norm. 'Faire la bise' refers to the little air kiss people trade upon meeting. When doing business in France, use first names only after being invited to do so. Use Monsieur or Madame followed the surname. The French will sometimes introduce themselves using their surname first, followed by their first name. If you speak French stick to the vous form until told to use tu. Dress well. The French draw information on people based on their appearance. Your business attire is a reflection of your success and social status. Always try to be tasteful, stylish and conservative. Women are advised to dress simply but elegantly. Accessorizing and wearing make-up is practiced widely by business women. Cuisine The French are passionate about food, so lunches are the norm when doing business in France. These usually consist of an appetizer, main meal (with wine), cheese, dessert and coffee and normally take up to two hours. This is a time for relationship building. Do not begin eating until the host says, 'bon appetit'. Pass dishes to the left, keep wrists above the table and try to eat everything on the plate. Be careful with adding salt, pepper or sauces to your food as this may imply you find the food tasteless. If eating in a restaurant, the person extending the invitation always pays. Be sure to reciprocate this gesture. Meetings and Negotiations If you plan to travel to France on business, meetings should be booked in advance in writing or by phone. Holidays in France are usually taken in July or August so these months should be avoided. Christmas and Easter are also periods where business winds down. Punctuality is a relaxed affair. Being fifteen minutes late is perfectly acceptable and the further south you travel, the more flexible this becomes. When doing business in meetings remain polite and courteous at all times. Avoid personal questions. Try not to appear over friendly as this may be construed as suspicious. The French communication style is direct, questioning and probing. Ensure you have a carefully planned proposal that has been logically organized and presented. The French are most receptive to low-key, rational presentations and arguments that clearly highlight benefits. Negotiations can become passionate. Argumentation is not meant to be confrontational but rather a means to analyzing your case logically. You will be judged on your demeanor combined with your ability to present your arguments coherently. Avoid exaggerations as the French do not appreciate hyperbole.If a stalemate has been reached when doing business, the French will continue to state their position. The emphasis is on you to take apart their arguments and approach the issue from a different angle. Similarly, once decisions have been reached the only means of overturning it would be through a well argued defense of your case. 5. Doing Business in Arab Countries: Few areas have received more attention from businesspeople in the industrialized world in recent decades than the Arab World. While Europeans have long held an interest in the Arab World, the United States had been relatively unaware of the region until after World War II. Even the European interest has historically been adversarial (as in the Crusades of the European Dark Ages or the European Catholic struggle for the control of Spain after 700 years of Arab civilization there) or subjugative (in the form of the 19th century European colonization of much of the Arab World following the French conquest of Algeria in 1841, and lasting in some regions until the 1970s). The significance of the current attention to the Arab World is that—in business terms at least—the Arabic countries are being viewed as a source of potential partners and as equals. In part, the reason for this has to do with a shift of control of the rich natural resources of North Africa and the Arabian peninsula in the 1970s from U.S.- and European-owned natural resource companies (most notably petroleum) to domestically run operations in the Arab oil-producing states. This also has to do with the growing recognition of the richness and venerability of Arabic culture, a culture as distinctive as any business culture in the industrialized world. Finally, the geographic location of the Arab World, sitting at the crossroads of three continents, has helped to place it at the center of an increasingly integrated world economy. DEFINING A DIVERSE REGION The very term "Arab World" is a questionable one. An Arab is a member of a linguistic group—that is, one who speaks Arabic. The Arab World, then, can best be defined as the region in which people predominantly speak Arabic. Yet throughout what would be considered the Arab World, tens of thousands of people speak languages other than Arabic, ranging from the numerous dialects of Berber on the African coast of the Mediterranean to Kurdish and Armenian in southwest Asia, from Nuer and Dinka in the Sudan to Fula and Wolof in Mauritania, and so on. The modern Arab World consists of between 19 and 21 nations. Listed in eastward geographic order 19 of these are indisputable: Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, the Sudan, Syria, Tunisia, the United Arab Emirates (itself consisting of seven emirates), and Yemen. Additionally, Palestine won self-rule in 1994 in the formerly Israeli administered West Bank and Gaza. Finally, Somalia—though Arabic there is a minority language with the majority of people speaking Somali—has been a member of the Arab League since 1974. Moreover, it is important to note that the constituent parts of the Arab World are themselves quite diverse. Geographically, they cover a region spanning all of North Africa from the Atlantic coasts of Mauritania and Morocco in the west, well into southwest Asia with Iraq, south into Sudan, and into the nations of the Arabian peninsula. Religiously, nations such as Saudi Arabia and Libya are almost exclusively Islamic, while other nations contain substantial Christian and Jewish populations. Over 10 million Arabs are Christian and 40,000 Arabs are Jews. Numerous other religions, such as the Druze of Lebanon and Syria, have ancient communities while the large number of Indian foreign workers in the Gulf countries of Qatar, Oman, Kuwait and the United Arab Emirates have led to substantial resident Hindu communities. In several parts of the Arab World, different religious groups live in peaceful integration, such as the Islamic, Jewish, and Christian communities of Morocco, while in Lebanon for decades nearly equipollent Christian and Moslem fought in a civil war that has only recently ended. Nor is the Arab World particularly unified in political terms. Iraq's Gulf War invasion of Kuwait and attacks on Saudi Arabia are only the most dramatic illustration of this point, but other less belligerent tensions also exist. DIVERSE ECONOMIC SITUATIONS The Arab nations have a wide range of economic performance. These range from the single commodity economies of great oil-producing nations of Saudi Arabia and Kuwait to the highly diversified emerging market of Egypt. Since the economic situations in each nation differ greatly, it is necessary to briefly examine the major Arab states in more detail. DIVERSE POLITICAL SYSTEMS The political systems in force in the various Arab states also differ markedly. The governments range from monarchies to military dictatorships and from one-party democracies to nascent actual representative governments. Even the monarchies are highly diverse in how they are ruled. On the one extreme is Qatar's Sheikh Hamad al-Thani, who though technically still an absolute monarch has, since his 1995 coup over his father, demanded democratic rule, often over considerable opposition. Since coming to power, Qatar's sheikh has eliminated newspaper censorship and established a highly controversial television station whose broadcasts reach throughout the otherwise heavily censored programming in the Gulf region. In 1999 Qatar held the first election of any Gulf State open to all citizens, including women. On the other extreme, Saudi Arabia and Bahrain remain hereditary absolute monarchies in which the only type of popular voice comes from hand-picked advisory councils. The United Arab Emirates forms a federation of seven emirs, each an absolute monarch in his own state, but jointly ruling the federation. Most Arab state monarchies, however, fall somewhere in between. Thus, Jordan, on paper a constitutional monarchy, was until 1999 ruled nearly as an absolute monarchy due to immense popularity of the late King Hussein; in the aftermath of Hussein's death, the new King Abdullah may find the provisions of representative government likely to come more to the fore. Other nations, such as Morocco and Kuwait, allow representative elections but severely limit the power open to those elected in such areas as defense, foreign policy, and money spent by the monarchs. It is, however, one of the contradictions of the Arab World that an absolute monarchy such as Qatar is arguably more representative than many of the regions nonmonarchies. Both Syria and Iraq, for example, are police states, ruled by dictators with absolute power exceeding that of most of the region's monarchies. More typical are the region's democracies which put on a show of elected leadership. Thus while the region's most populous nation, Egypt, is technically a democracy, the country has been long dominated by a single party, the National Democrats. Indeed, two times in 15 years, Egypt dissolved its parliament on grounds that the election procedures were unconstitutional. After Egypt's 1995 election, opposition candidates went to court to question the results in more than half of the nation's 444 seats open to vote. Still, sincere efforts toward true elected democracy have surfaced in the 1990s. Yemen, for example, was much-praised for its open elections in 1993, but the political dissent the elections bred contributed to the civil war that broke out there in 1994. More encouragingly, Algeria ended the civil war that had raged there throughout much of the 1990s through the institution of national elections. Nevertheless, in well over 20 years, only one Arab state—strife-torn Lebanon— has changed leadership through democratic elections. By the end of the 20th century, the length in office for Arab heads of state averaged 22 years. 6. Doing business in America: Business Habits Americans are informal. The use of given names ("first names") is common, even between subordinates and managers. Titles, except for medical doctors, are not used. Business is often conducted over breakfast, lunch, or dinner. Business entertainment may be conducted at relaxed events such as the opera, sports events, or even in personal residences. Business hours are usually from 8 a.m. or 9 a.m. to 5 p.m. (17:00) or 6 p.m. (18:00). Businesses do not close during the lunch hour period, which ranges from about 11:30 to 1:30 p.m. (13:30). Most Americans eat dinner at approximately 7 p.m. (19:00). Legal Environment: The use of litigation in the United States to solve business and other disputes is well known. However, the risk and expense of litigation are not an impediment to conducting business in the United States. Alternative dispute resolution methods such as arbitration and mediation are gaining popularity. And, while litigation in the U.S. has increased, most businesses successfully operate for many years absent litigation of any kind. Imports & Exports: The U.S. is a member of the General Agreement on Tariffs and Trade (GATT) and several other international economic associations. The United States is an active export and import country. Its 1996 exports of goods and services totalled $625 billion; its imports totalled $818 billion. Its 1996 major export trading partners, in approximate order of volume, were: Canada, Japan, Mexico, United Kingdom, South Korea, Germany, Taiwan, Netherlands, Singapore, France, Hong Kong, Brazil, Belgium/Luxembourg, China, Australia, and Italy. Its 1996 major import trading partners, in approximate order of volume, were: Canada, Japan, Mexico, China, Germany, Taiwan, United Kingdom, South Korea, Singapore, France, Italy, Venezuela, Hong Kong, and Belgium/Luxembourg. North American Free Trade Agreement: In 1992, Canada, Mexico, and the United States entered in the North American Free Trade Agreement ("NAFTA"). The agreement will reduce or eliminate tariffs, export taxes, duty waivers, customs fees, and other trade barriers between the countries so that when the agreement is fully effective, businesses in the two countries will be able to ship goods either way across the three borders free of tariffs. Implementation of NAFTA began on January 1, 1994. Investment Factors: Governmental Policy & Incentives: The federal government allows investment in the U.S. consistent with the needs of the country. This attitude basically treats foreign capital on the same basis as U.S. capital. Any investment in the U.S should be made based on sound commercial practices, since there are no tax or other special privileges given to foreign investors. Investments by non-U.S. individuals or companies are limited in national security matters such as atomic energy and defense, communications, banking, and some other business areas. There are other restrictions: some states prohibit the sale of land (usually agricultural) to foreign investors; certain real estate managed by the federal government cannot be sold to foreigners; the sale of agricultural land to a foreigner must be reported to the Secretary of Agriculture. Legal counsel should review any proposed investment to be certain it is not restricted or limited by federal or state law. A foreign business operating in the U.S. is entitled to obtain for itself the same federal government-sponsored assistance to business (such as programs of the Small Business Administration) that exists for domestic operators and the same basic tax treatment. Many state and local governments offer aggressive incentives to attract foreign businesses in their particular area. Such incentives commonly include income and real estate tax concessions, financing, and sometimes opportunities to purchase or lease operating facilities at greatly reduced prices. LABOR AND POLITICAL ATTITUDES Laboring Americans do not resent foreign ownership of businesses unless jobs are threatened. Conversely, if foreign investment creates jobs, foreigners are heartily welcomed. Some politicians occasionally express concern about foreign investments in the U.S., but investment restrictions on foreigners are not seriously contemplated. 7. Doing Business in Japan: An ancient culture which has evolved within the geographical boundaries of an island has produced a modern day society with unique values, traditions and customs. Doing business in Japan arguably poses the most potential for cross cultural misunderstandings. However, Japan's professionals are well educated in doing business with the West and will try to modify their own behaviors to accommodate you. Nonetheless, doing business in Japan necessitates preparing oneself by understanding areas such as business culture, business etiquette, negotiation and meeting protocol. This guide to doing business in Japan is in no way meant to represent an allinclusive summary of tips on doing business in Japan. Rather it highlights some key areas for consideration. Group Orientation Altruism, team-work and group cohesiveness are all areas greatly stressed within Japanese society. Individual identity is defined by the social group. Consequently, when doing business, the Japanese stress compromise and selfdiscipline. Hierarchy With its roots in Confucianism, hierarchical structures classify an individual's position within a group and in society. Status is determined by factors such as age, employment, company and family background. The hierarchical system dictates that due respect be afforded to those of higher status. When doing business in Japan be aware of hierarchy and adapt your behaviour accordingly. Respect In order to preserve harmony in society and to maintain the clarity of the hierarchical structure, showing respect to others acts as a crucial social lubricant. Respect is conveyed through language, behaviour, etiquette, body language and other subtle forms of non-verbal communication. Meeting and Greeting There is heightened sense of formality in Japanese interaction. When doing business in Japan, your suitability in respect to conducting business will be assessed during a first meeting, so always maintain a sense of professionalism. The bow is an integral part of Japanese society. It is used when meeting, getting attention, to show gratitude, to express sympathy or as an apology. Whilst doing business in Japan as a Westerner, you would not be expected to bow. You will most likely be greeted with a handshake combined with a slight nod of the head. Introduce yourself with your full name followed by your company name. It is important to use proper titles when addressing someone, so always establish the position of the other person. The exchanging of business cards when doing business in Japan involves a degree of ceremony. The card is seen to represent the individual, so should be treated with respect. Before travelling to Japan, ensure you have ample cards and have one side translated into Japanese. Include your position within the company on it. Invest in a carry case to store cards and keep this in the inside pocket of a suit jacket. When exchanging, offer your card with both hands or just the right hand. Present Japanese side up. Ensure there is no barrier between you and the recipient such as a table, chair or plant. When accepting always use two hands as this shows deference. Building Relationships When doing business in Japan a successful relationship with a Japanese colleague or client is based on three factors: sincerity, compatibility and trustworthiness. Sincerity means that you are compromising, understanding and you want to conduct business on a personal level. Compatibility is established when you are seen to be concerned about the personal relationship, the well being of the company and not just focused on financial gain. Trustworthiness relates to the faith put in you to protect from loss face. Communication The emphasis in Japanese culture on maintaining harmony has developed in such a way as to allow very vague forms of expression. The cultural logic behind this is that by avoiding direct or explicit statements one has a better chance of not causing offense. When doing business in Japan clarify meanings and dig deeper for more information. The Japanese are implicit communicators. An explicit communicator assumes the listener is unaware of background information or related issues to the topic of discussion and provides it themselves. The Japanese however assume the listener is well informed on the subject and minimises information relayed on the premise that listener will understand from implication. Thus the saying, "Say one, understand ten," i.e. you will be expected to understand nine additional points to every one made. Meetings and Negotiations At a meeting you will always deal with a team as opposed to an individual. Each attendee will be there with a particular expertise so either bring assistance or be sure you are confident enough to handle all the questions you will receive. You will greet the most senior employee first and then others in descending order. The senior employee will be there as a ceremonial representative of the company. The lesser ranking attendees will usually do the talking or negotiating. Meetings usually take place for only one of three reasons: to build rapport, exchange information or confirm previously made decisions. Decisions are rarely made in a meeting. If rapport has yet to be established then this is your priority. It is important not only to build relationships with all the senior figures but all lower ranked ones too. Remember group consensus is important so the opinions of all staff will be taken into account when coming to a decision on any proposal. The Japanese are very detail orientated. Expect lots of questions and lots of questions repeated in different ways. Be sure to have the answers as the failure to do so will look unprofessional. Be sure to bring as much information as possible, in writing, on your company, service, product or proposal. The Japanese like dealing with quiet, sincere and compromising individuals. Extroverts are seen as brash and arrogant. Early on in negotiations remain humble, indirect and non-threatening. Do not disagree openly, do not put people on the spot and always employ diplomatic language when doing business. Be sure to hold off concessions till the end of proceedings. If made early your integrity will be questioned. Silence is considered a virtue. If things go quiet when doing business in a meeting then do not panic. Reflection is taking place. Silence may be also be accompanied by the closing of the eyes. Never interrupt or break the silence. 8. Doing Business in Germany: Doing business abroad brings people face to face with different cultures and practices. Prior to travelling to another country it is the norm not to consider factors such as differences in meeting etiquette, negotiation styles and business protocol. However, it is precisely these areas one should be addressing before doing business abroad if the success of the trip is to be given a better chance. A lack of cross cultural understanding leads those doing business abroad to form stereotypes. Common terms used to describe Germany include humourless, aggressive, distant, stubborn and obsessed with details. There are elements of truth within each, yet all emanate from our own cultural programming. For example, in the UK it is acceptable to swap jokes and have informal chats at work. When a Britain is doing business in Germany it is therefore likely that they will interpret the strict formality as dull and humourless. On the other hand, a German doing business in the UK may interpret working practices in the UK as unprofessional and unproductive. This guide to doing business in Germany is intended to highlight some important key areas that one may encounter in Germany. Organization Germans are often uneasy with uncertainty, ambiguity and unquantifiable risk. This has become manifest in both social and business spheres. Socially, Germans lean towards conservatism and conformism. When doing business in Germany it is possible to notice a heavy emphasis on careful planning, consideration, consultation and consensus. This has developed an appreciation for detail, facts and statistics. Organization is a means of negating uncertainty and averting risk. Aversion to Risk The emphasis on conformity combined with a fear of the unknown makes Germans very apprehensive about risk. Security is guaranteed through risk analysis. This is achieved through careful deliberation and scrutiny based upon factual evidence as opposed to intuition or 'gut-feeling'. Written documentation is seen as the safest and most objective medium for analysis. A painstaking review of details ensures all relevant information has been taken into consideration. Communication Germans value their privacy. Mentally there is a divide between public and private life. As a result, Germans wear a protective shell when doing business. Since intimacy is not freely given, this may be interpreted as coldness. However, this is not the case. After a period of time walls and barriers eventually fall allowing for more intimate relationships to develop. Communication styles in Germany may be perceived as direct, short and to the point. Formality dictates that emotions and unnecessary content do not have a place in conversation. Meeting & Greeting Firm, brief handshakes are the norm when doing business in Germany. When several people are being introduced take turns to greet each other rather than reaching over someone else's hands. Avoid shaking hands with one hand in your pocket. When women enter a room it is considered polite for men to stand. German etiquette requires you to address someone using Herr (Mr.) or Frau (Mrs/Ms) followed by their surname. Only family members and friends use first names. Professional titles should also be used for doctors, academics, etc. Try and establish professional titles prior to any meeting. Punctuality When doing business in Germany, remember that punctuality is a serious issue. Business people work hard and are under a lot of pressure. Germans typically plan their time very carefully. It is considered bad etiquette to be late or early as it shows disrespect for peoples' time. Humour A common misconception is that the German sense of professionalism and strict protocol when doing business leaves no room for humour. Yet Germans, just as much as anyone else, like to laugh and as long as it is appropriate, tasteful and in context then humour is acceptable. Meetings and Negotiations Germans plan ahead. Therefore, ensure you book meetings at least 2-3 weeks in advance. This is also applicable if you wish to have lengthy telephone conversations. Meetings are usually held between 11-1 p.m. and 3-5 p.m. Avoid Friday afternoons, the holiday months of July, August and December and any regional festivals. Meetings are functional, formal and usually stick to a set agenda including start and finish times. The phrase 'let's get down to business' is definitely appropriate for German business meetings as small talk and relationship building are not priorities. When entering a room the most senior of you should enter first. The most senior German counterpart should be greeted initially before any others present. Wait to be told where to sit. Treat the whole process with great formality. The Germans will analyse proposals thoroughly. Ensure the information you provide is in written format and presented scientifically. Logical conclusions based on empirical evidence will only normally carry any weight. Remember decisions will not be made on your sales technique or charm but on concrete facts that demonstrate a sound opportunity with minimal risk. Decisions are made slowly and methodically. Do not try to rush proceedings or apply pressure. If anything, enquire as to areas in which you may be able to furnish them with additional or more specific information. Try and back-up information with insight from personal experience or professional qualifications. Once a decision has been reached minds are very rarely changed. 9. Doing Business in South Korea: For the international business person, doing business in foreign countries brings with it cross cultural challenges. An understanding of a country's business culture, attitudes and etiquette is a useful way of establishing good interpersonal relationships which ease the business process. This short guide to doing business in South Korea is presented as an introductory guide to some of the more important areas of business culture and etiquette. It is not meant to be a comprehensive summary of 'doing business tips'. Rather it offers some key insights into the cross cultural differences you may face when doing business in South Korea. Meeting & Greeting Etiquette When doing business in South Korea men greet each other with a slight bow sometimes accompanied with a handshake. When handshaking, the right forearm is often propped up by the left hand. Maintaining eye contact is good etiquette. In South Korean business culture, women also shake hands. Western women doing business there will need to instigate a handshake with Korean men, as out of politeness, a hand will not be forthcoming. Address people by their title or by their title and family name. First names can be used once a relationship has been established but wait for your Korean counterpart to initiate this change. Business Card Etiquette Prior to doing business in South Korea bring a plentiful supply of business cards. They will be exchanged frequently. Try and have one side of the card translated into Korean. Mention your title on the card along with any qualifications - this helps convey your rank. When presenting or receiving a card, use both hands. After receiving a card, read it and comment on it before putting it into a card case or pocket. Do not shove it into a pocket as this will be viewed as disrespectful. Gift Giving Etiquette A part of doing business in South Korea is the exchanging of gifts. It is done to secure favours and build relationships. Gifts are always reciprocated so bring be sure to bring some with you from your native country. Good gifts for a first visit are office items, maybe with your logo on them. After this try and bring items of beauty and craftsmanship. Foodstuffs will also be appreciated. Avoid overly expensive gifts as this will require the recipient to match the value when they reciprocate. If offered a gift, it is good etiquette to offer some initial resistance. However, after the giver insists for the second or third time feel free to accept. Gifts are usually not opened in front of the giver, although it may be a good idea to ask if they would like you to do so. Meetings Prior to doing business in South Korean ensure you book any meetings well in advance. The most convenient times for doing business are between 10:00 a.m. to 12:00 p.m. and 2:00 p.m. to 4:00 p.m. Times of the year to avoid include holidays like the Lunar New Year (around January/February) and the Moon Festival (around September/October). Punctuality is important in South Korea and being on time is recommended. However, business people are busy and have hectic schedules which may cause them to be late occasionally. Be courteous and do not display any negative emotions if someone is late to meet you. When entering a meeting room, the most senior member of your delegation should enter the room first and should sit at the middle of the table. Before doing business in South Korea understand that personal relationships generally take precedence over business. A first meeting is a 'get to know' affair rather than focusing on business matters. It could take many business trips to South Korea to reach an agreement or close a deal. 10. Doing Business in Australia: For American companies, Australia‟s appeal is still compelling: few barriers to entry, a familiar legal and corporate framework, sophisticated consumer and industrial demand, and a straightforward business culture. The Australia-U.S. Free Trade Agreement enhances the long and successful trading relationship by eliminating tariffs on almost all manufactured and agricultural goods. The Agreement also eased investment rules, and opened all levels of the Australian government procurement market to U.S. companies. We believe this is an excellent time for American companies with innovative products and technologies to develop an entry strategy for the Australian market, or to re-examine previous business plans for this market. 11. Doing Business in Austria: For the business person who works internationally, doing business in a foreign country brings with it certain intercultural communication challenges. From the simple differences in the way people meet, greet and eat to the more complex differences in communication, presentations and negotiation it is always a benefit to get to understand a country's business culture, protocol and etiquette. This guide to doing business in Austria offers some introductory points around the topic of business culture and etiquette. It is not intended to summarize all 'doing business tips' nor meant to stereotype the Austrians. Rather, it highlights some important key areas for consideration when doing business in Austria such as how to meet and greet, communicate and conduct business meetings. Meeting and Greeting: Handshakes are the norm in Austria when entering a meeting. It is important that you shake hands with all attendees and that your handshake is firm and confident and that eye contact is maintained. Austrians adhere to a fairly formal culture and it is unlikely that body contact will progress beyond the handshake (e.g. pat on the back etc.) unless you are family or close friends. When doing business in Austria you should use honorific titles where necessary. After the initial meeting, in which an individual will be introduced with their honorific title and surname, it the surname can be dropped and the honorific title only used. If someone does not have an honorific title, then you should use 'Herr' to address a man and 'Frau' to address a woman with their surname. You should wait for your Austrian hosts to determine when it's appropriate to move to the use of first names. Communication: When doing business in Austria you will notice that Austrians are very direct in their communication and tend not to furnish their speech with pleasantries or non verbal body language cues. Since they expect to be taken at their word, you should therefore not take offence at this. Individuals from indirect cultures often it a challenge to accustom to this particular style. Austrians only employ minimal body language when conversing and appreciate personal space during any interaction. You may find however, that as you get to know people better, that they become more animated or emotive in their communication. 12. Doing Business in Belgium: For the business traveller, doing business in foreign countries can bring with it cross cultural communication challenges. Understanding and appreciating a country's business culture, protocol and etiquette is important in nurturing good business relationships. Meeting & Greeting Belgians shake hands when meeting, although among friends the 'air kiss' is traded times on alternate cheeks. Wait for your Belgian counterpart to initiate the move to this level of intimacy. There are three languages used in Belgium - German, French and Flemish. With German and Flemish speakers use the English terms Mr., Mrs. or Miss. With French speakers, use Monsieur, Madame or Madamemoiselle. First names are only usually used between friends. Business cards are usually exchanged upon meeting. Try and have any cards translated into the target language of your counterpart. Business Meetings Doing business abroad inevitable involves business meetings or negotiations. To book an appointment in Belgium, phone or write at least a week in advance. You will most probably be given a time and date rather than having to suggest one. Punctuality is vital in Belgium. Unless there is a very good reason, lateness is simply considered bad form. First meetings are usually used for 'getting to know you' purposes. However, some may get straight down to business, so be prepared for both possibilities. A little bit of small talk is recommended simply to establish some sort of relationship and build trust. Agendas are always a good idea for meetings. Belgians like a meeting to be well structured and focused. Ensure the meeting does not have interruptions such as phones ringing, trips to the lavatory or frequent coffee breaks - your counterparts will most likely want to get business done as soon as possible. During negotiations one should not rely solely on facts, statistics and other empirical evidence. Indeed, appealing to personal feelings and sentiments can be just as effective. Dining Etiquette Dining is a good way of relationship building. Belgians usually eat dinner between 7-8 p.m. Use dinners to engage in talk on a personal level. Business can be discussed but wait for your counterpart to initiate the conversation. Be sure not to start drinking until the toast has been made. Glasses are raised twice during a toast; once during the verbal toast and then after exchanging glances. 13. Doing Business in Egypt: For today's business traveller, doing business abroad happens a lot more frequently and involves visiting a much more diverse range of countries. In today's world, cross cultural communication skills are critical to ensuring success on the international stage. Understanding a country's working practices, communication styles, business culture, protocol and etiquette is important in establishing good business relationships and maximising your potential for success. This guide to doing business in Egypt offers some very basic pointers on some of the above mentioned areas such as business culture and etiquette. It is not intended to summarise all 'doing business tips' nor meant to stereotype the Egyptians. Within all societies, cultures, religions and cultures people will differ. The guide simply highlights some key areas for consideration when doing business in Egypt. Islam Islam is practised by the majority of Egyptians and governs their personal, political, economic and legal lives. Islam emanated from what is today Saudi Arabia. The Prophet Muhammad is seen as the last of God's emissaries (following in the footsteps of Jesus, Moses, Abraham, etc) to bring revelation to mankind. Among certain obligations for Muslims are to pray five times a day - at dawn, noon, afternoon, sunset, and evening. Friday is the Muslim holy day where men should attend congregational prayers at the mosque. During the holy month of Ramadan all Muslims must fast from dawn to dusk. Fasting includes no eating, drinking, cigarette smoking, or gum chewing. Gifts Remember alcohol is forbidden in Islam, so never give it as a present unless you are 100% sure that they drink. In those cases where you do give alcohol, make sure it is done discreetly. If invited to an Egyptian's home, take along some sweets, pastries or baked goods. Flowers are only really used at weddings and funerals. If your host is a devout Muslim, then visit a local souq and pick out something suitable such as oil/perfume, prayer mat or if possible some Zam-Zam water from Mecca. Meeting & Greeting The most common greeting between people is the handshake. Friends and family will also kiss on the cheek. The common greeting you will hear is "Asalamu alaikum". Women are common place in the Egyptian workplace, but not all will feel comfortable shaking a man's hand. If unsure, one should wait to see what the woman does first. If she does not shake hands, then a greeting accompanies by a slight nod of the head is fine. Titles When doing business in Egypt you will notice the love of titles. The hierarchical nature of Egyptian society means that status is always an issue. Common titles are doctor (for both a medical doctor and an academic), muhendis (engineer) and sheikh (religious scholar). Most Egyptians should be addressed by their title followed by surname. If no clear title exists then use Mr or Mrs. Business Meetings If you plan to arrange some meetings in Egypt do so only a few weeks in advance. Confirm the meeting prior to leaving for Egypt and also upon arriving. Things change rapidly so it is best to ensure you are at the forefront of their minds. Remember that bad times to do business are during Ramadan and the last few days of the Hajj season, which is followed by a three day festival. On Fridays very few people will work. When meeting someone for the first time, never dive straight into business. This would be a sign of disrespect. Ensure you ask personal questions so you get to know the person, and also be willing to discuss your personal circumstances, i.e. children, job, etc. Always wait for the other party to start talking business. When doing business in Egypt you will soon realise that business and personal are intertwined. Therefore do not be offended if people walk into a meeting and start chatting to your counterpart. This is just part of the process. Remain calm, be patient and you will soon get your counterpart's full attention. Negotiating The key to doing business well in Egypt is patience. This is especially true in negotiations. Business meetings will be slow and lengthy affairs as you move from chit-chat to business. Never use hostile, pushy or pressured tactics when negotiating. This will always work against you. It is best to concentrate on elements such as trust, the personal relationship, mutual benefit, status and of course profitability. 14. Doing Business in Greece: For an international business person, business traveller or expatriate, doing business in a foreign country poses some interesting cross cultural challenges. Getting to grips with a country's business culture, protocol and etiquette is important in maximising your potential and getting the best out of your visit. This guide to doing business in Greece offers some simple introductory points to a few of the above mentioned areas such as business culture and etiquette. It is not intended to summarise all 'doing business tips' nor meant to stereotype the Greeks. It simply highlights some important key areas for consideration when doing business in Greece. Meeting & Greeting The handshake is the most common form of greeting in the business environment. Among friends or close acquaintances you may also see an embrace or kiss. Wait for the other party to initiate the move to this level if it ever comes. Cultural Nuances To say 'no' in Greece use an upward nod of the head. For 'yes' tilt the head to either side. However, note that many Greeks now also use the European/North American gestures too so it can be confusing! The "OK" sign (circled thumb and forefinger) may be considered obscene. Never raise an open palm at face level as this is an insult. If you see a Greek make a puff of breath through the lips, they are warding off the 'evil eye'. This is usually done after receiving a compliment. Try and avoid discussions involving sensitive issues such as with Turkey, the Cyprus issue, or the politics of the former-Yugoslavia. Business Meetings The Greeks can be fairly laidback and as such meetings can be arranged at short notice. It is best to do so over the phone and to confirm in writing (fax or email). From May to October the working week is from Monday to Friday, 08:00 to 13:30 and then 16:00 to 19:30. However, from October to May the lunch break may be extended slightly. Punctuality is expected although a slight delay will not he held against you. Meetings are usually vibrant affairs. Be prepared for lots of questions, many people talking at once and interruptions. They will usually test your knowledge and experience and demand proof. You will be expected to bargain, and bargain hard. Seniority is respected. All authority and ultimate decision making will rest with them. A leader is expected to provide a way of rallying the divergent opinions together. Never do anything to cause your Greek colleagues to lose face in front of their counterparts. Do everything you can to show how your proposal enhances their philotimo (love of honour). 15. Doing Business in Guatemala: Local business incentives The government has implemented various incentive programmess aimed at helping companies. The most important deals with the production or the assembling operations using imported machinery or components. Finished products are exportable goods - outside Central America -. Then, the government grants companies a tax and VAT exemption on imported goods. However, these plans do not involve agricultural products, oil and forest products, which benefit from another incentive programme. Free trade zones have been established to encourage investments. They are located in Puerto Santo Thomas de Castilla, near the main Guatemala's port, on the Atlantic coast as well as in Palin, not far from Guatemala City. Companies established in these free trade zones are tax and customs duties exempt (except Social Security contributions). Both the agency for investments promotion and the Guatemalan Development Foundation provide assistance and support, regarding investment matters. Foreign exchange control A Central Bank's authorization is required in order to be able to repatriate profits and capital. 16. Doing Business in Italy: Doing business abroad introduces international business people to differences in approaches to business, business etiquette and protocol. Although these may not be crucial to business proceedings they should not be dismissed as unnecessary. Cross cultural awareness can enhance the potential of the international business person's trip considerably. Let us look at a brief example: There are two business people each planning on doing business in Italy. Both have similar proposals. One ignores the possible impact of culture and concentrates their efforts on the business proposal. The other also invests time and energy in the proposal but in addition realises that doing business in Italy is a lot different to doing business in the UK or USA. They look into the business etiquette of Italy, the way in which meetings are conducted and negotiation styles. Nine times out of ten the latter of the two will have the advantage. They will be able to tailor their proposal and demeanour to gel better with the Italian way. In addition, they would endear themselves to the Italian hosts. Etiquette Good manners and courtesy are prized qualities in Italy. When doing business in Italy ensure your conduct is always polished. There are etiquettes and protocols for many social and business situations, however, it is important to remember that Italians rate considerateness above behavioural formulas. When meeting and departing always shake hands. This is valid for both individuals and groups. After doing business in Italy for a period of time and building relationships do not be surprised if you are embraced when being met. This indicates the relationship has reached an intimate level. When doing business in Italy you will notice that little personal space is left between people when interacting. In addition, Italians are a tactile people. Moving away or keeping your distance may be interpreted as cold and unfriendly. If you are familiar with Italian, use the polite 'lei' form until a relationship is established, then use the more informal 'tu' form. When doing business in Italy, address people using 'Signor' (m) or 'Signora' (f) followed by their surname. 'Dottore' (m) or 'Dottoressa' (f) is used for those who have graduated. When doing business in Italy, dress to impress. It is no coincidence that Versace, Gucci, Prada and Dolce & Gabbana are all Italian fashion houses. Italians like to make an impression with their clothes. What you wear speaks volumes about the kind of person you are. Punctuality Italians are usually relaxed around issues relating to time. Being late with a good reason will not have any negative consequences. However, deliberate lateness is considered sloppy and taking people's time for granted is simply rude. When doing business in Italy err on the side of caution and aim to be punctual. Business Entertaining Hospitality plays a key role in Italian business culture. Invitations to lunch and dinner are to be expected when doing business there. At such occasions a small exclusive group will usually be present. Each attendee will have a particular interest in your visit. If you plan to host a meal, ask the most senior Italian contact who you should invite. Dining does have certain protocol in Italy. However, do not place too much emphasis on this as more time would be spent worrying about etiquette mistakes than enjoying the experience. Major etiquette tips are that the most honoured guest sits at the middle of the table or on the right of the host; the host always pays; pass dishes to the left; keep your knife in the right hand and fork in the left and do not answer phone calls at the table. Meeting and Negotiations Italians prefer to do business with someone they know. When doing business in Italy, use contacts and networks to introduce you before proceeding to set up meetings. To arrange a meeting write, in Italian, first. Follow this up with a phone call, fax or email. The best time for meetings is between 10 - 11 a.m. and after 3 p.m. Avoid August as most businesses will run on skeleton staff due to holidays. Negotiations can be slow. Demonstrating a sense of urgency is seen as a sign of weakness. At the beginning of a meeting avoid business and concentrate on some small talk. Topics of discussion could include Italian culture, food, wine and football (soccer). Italians will take away proposals and analyse them carefully. Be sure to offer as much information as possible in written form for them to take away. A known Italian tactic is to dramatically change demands at the eleventh hour to unsettle or test the flexibility of their counterparts. Remain firm. 17. Doing Business in Malaysia: Business practices in Malaysia When meeting your Malaysian counterparts for the first time, a firm handshake is the standard form of greeting. However, you should only shake hands with a Malaysian businesswoman if she initiates the gesture. Otherwise a nod or a single bow is appropriate. With such an array of cultures in Malaysia addressing Malaysians properly can be difficult. It is advised to find out in advance how you should address the person you are to meet. Generally speaking, a Malay‟s first name is individually given, while the second and third name indicate those of the father and the grandfather. In some cases the words “bin” (son) or “binti” (daughter) can be added after the given name. Gifts are not usually exchanged as they may be perceived as a bribe. However, in the event that you are presented with a gift, it is customary to accept it with both hands and wait until you have left your Malaysian colleagues before opening it. Be sure to reciprocate with a gift of equal value in order to avoid loss of face. Business cards are customarily exchanged after an initial introduction in Malaysia. Since a large proportion of Malaysian business people are Chinese, it will be useful if your card is printed in both English and Chinese and that details of your education, professional qualifications, and business title are included. Cards should be presented and received with both hands, and time should always be spent examining the information before placing it on the table or in a briefcase. 18. Doing business in Mexico: Mexico's large and dynamic economy offers export opportunities in virtually any business sector. U.S. Commercial Service Specialists maintain up-to-date information on Mexico's Best Prospect industry. 19. Doing Business in Netherlands: The Netherlands has joined the list of the top five countries with the best investment climates in Europe. The economy is growing, the fiscal rates are favourable and corporation tax has once again been reduced to below the European average. As in 2006, the economy will again this year grow by 3% and the export turnover will undergo record growth of 12 percent. All of the above constitute ample reason for setting up business in the Netherlands. 20. doing Business in Nigeria: Across Nigeria, states vary substantially on the ease of doing business, but they can achieve better business environments by sharing and adopting good practices. This is a key finding from Doing Business in Nigeria 2008, the first subnational report of the Doing Business series in Sub-Saharan Africa. The report tracks the number of procedures, costs, and time it takes for Nigerian companies to comply with business regulation. It uses four indicators: starting a business, dealing with construction licenses, registering property, and enforcing contracts. The report finds that registering a business has become significantly easier, due to a computerized registry and newly established zonal branches of the country‟s Corporate Affairs Commission and Stamp Duty Offices. The report also finds differences in some indicators across states. For example, complying with building regulations is easier and cheaper in northern states, while the cost of building permits varies widely throughout the country. A permit for a warehouse would cost 25 percent of Nigeria‟s income per capita in Sokoto, whereas the same permit would cost 826 percent in Lagos. The report also finds that dealing with licenses is easiest in Kaduna. The subnational variances show that states can play a significant role in shaping Nigeria‟s local business environment. Simple administrative reforms at the local level can make Nigerian states more competitive both nationally and globally . “The report presents an opportunity for Nigerian states to benchmark their investment climates and compare themselves with other cities with which they compete for FDI. State governments have an influence in enabling private sector development, and the report provides a mechanism for evidence-based dialogue with state governments on reforms,” said Solomon Adegbie-Quaynor, IFC Country Manager for Nigeria. “The report also lets state governments track annual improvement in the investment climate." Nigerian states performed worst on property registration. Obtaining the governor‟s consent, which is required for property transfers, is the main source of delay and high costs associated with transfers. Currently, all Nigerian states would rank low in the global Doing Business ranking. Abuja is Nigeria‟s top performer in property registration. But when compared globally, the state ranks 157 out of 178 economies. There are also substantial differences in the time and cost to enforce a commercial contract. Typically, court performance is better in states such as Abuja, Kaduna, and Lagos that have implemented the new High Court rules. Across all the states, enforcement is a significant factor to delays in recovery of commercial debts among all states. Nigerian states do not need to look far for ideas on how to improve their business environments. Should any state adopt the best regulations already in place, its ranking would improve in all four indicators studied by the report. Higher rankings on the ease of doing business are associated with growth, more jobs, and a smaller informal sector. In the global Doing Business 2008 report, Nigeria—represented by Lagos— ranked 108 among 178 economies. “There is no better way to create growth and jobs for Nigerians than through improving the business environment for private enterprises. The report will provide a strong basis for dialogue among Nigerian stakeholders on how to move from analysis to action, so that jobs can be created soon,” said Onno Ruhl, World Bank Country Director for Nigeria. 21: doing Business in Pakistan: Doing business in Pakistan can be a pleasant and profitable experience if you have the right contacts to help guide you through an otherwise challenging commercial environment. Whether you are an importer, financial service company, marketing company, trade promotion company, franchisee, or a joint venture in Pakistan, Business Service Provider provides an affordable place to advertise your business and services. 22. Doing Business in Portugal: No other European country has undergone the same amount of dramatic changes which have been seen in Portugal since its 25th April Revolution. The 1974 revolution ended almost 50 years of dictatorship and heralded in the dawn of a new country, keen to shed its colonial past. The country has moved rapidly, from an almost third world status, to become a valued member of the modern European Union. (Although Portugal had a predominantly agricultural infrastructure in 1974, only 12% of the current Portuguese workforce are currently engaged in agricultural activities.) However, despite the changes that have undoubtedly taken place in the country, Portugal still suffers from a number of inherent difficulties which many observers, both internal and external, see as real brakes on the further development of the economy. The biggest problem faced by the country seems to be the continuing (and seemingly unchanging) burden of a vast and largely inefficient public sector. This public sector issue is often charged with not only producing ongoing Budget difficulties bit also stifling private sector initiatives and vitality. Private sector business is changing from a tradition of autocratic, family-run business conglomerates dominating the commercial landscape, to a much more varied landscape, where the influence of inward investment from major MNC‟s is starting to have a pronounced effect. The Portuguese business scene is, therefore, in a state of flux with new ideas and business models competing with more traditional approaches and ideas. 23. Doing Business in Saudi Arabia: The historical journey which led to the foundation of the Kingdom of Saudi Arabia was notably one of triumph and misfortune. Prior to the emergence of Islam, the peninsula was divided between various nomadic Arab tribes and subject to invasion from a number of outside cultures. The creation of modern Saudi Arabia dates from 1932 when the late King Abdul Aziz AL-Saud unified the surrounding regions as the Kingdom of Saudi Arabia. To this day the monarchy remains the central institution of the Saudi Arabian Government, governed on the basis of Islamic law (Shari‟a). The discovery of oil on March 3rd, 1953 transformed the Kingdom of Saudi Arabia from a purely trade-based economy to the largest exporter of petroleum in the world. This economical revolution paved the way for a greater industrial base and opened up the country to the business world. For those wishing to do business with Saudi Arabia an understanding of Saudi etiquette and the personal manner in which business is conducted is essential to success. 24. doing Business in Spain: For the international business person doing business in a foreign country offers certain intercultural challenges. Differences in culture mean differences in etiquette and protocol. Understanding a country's business culture, protocol and etiquette is important in achieving success abroad. This guide to doing business in Spain offers some introductory points to some of the above mentioned areas such as business culture and etiquette. It is not intended to summarise all 'doing business tips' nor meant to stereotype the Spanish people. Rather, it highlights some important key areas for consideration when doing business in Spain. We have focused on three areas: how to meet and greet, communicate and conduct business meetings. Meeting & Greeting: When doing business in Spain handshakes are standard as with the rest of Europe. First-time introductions will be formal; as the relationship develops it will naturally become less so. It is always a good idea to try and use some of the local language. A simple means of doing so is in using the appropriate greeting for the time of day "Buenos dias" (good day), "Buenas tardes" (good evening) or "Buenas noches" (good night). Most people can be greeted using Señor (Mr), Señora (Mrs) or Señorita (Miss) followed by their surname. You may also hear people being addressed with their professional titles; Profesor may be used with teachers and engineers are referred to as Ingeniero. Communication: The Spanish can be described as a cheerful and outgoing people. Their warmth and initial friendliness may appear perfunctory or superficial to a reserved foreigner but in fact allows a way of observing social niceties whilst at the same time affording the time and a proper opportunity to get to know someone. When doing business in Spain, note that relationships built in a face-to-face environment are the be all and end all. People will want to spend time getting to know others in order to ensure the right chemistry exists for a business relationship. It is therefore important to present yourself in the best possible light; the Spanish appreciate people who are dignified yet modest. The ability to be amusing and entertaining is also much prized and humour plays an important part even in business meetings and discussions. Banter is acceptable but be sure not to employ sarcasm as it may get lost in translation and cause offense. Meetings & Negotiating: Initial meetings may be more focused on the relationship rather than business. Let your Spanish counterpart take the lead. There may be an agenda and a starting time, but they serve more as guidelines rather than a rigid timetable. Issues may be discussed simultaneously rather than separately. Several people may also try to speak at once and interruptions are not uncommon. If this happens it should not be interpreted as rude but rather an indication that what you were saying was of great interest. 25. Doing business in south Africa: The Rainbow Nation South Africa is ultimately a multifaceted nation. Its many people, languages and cultures have experienced a turbulent history that seemingly turned the corner in the early nineties with the end of apartheid. The government's goal since then has been to end racial discrimination and develop a unique identity based on being South African rather than anything else. Although work has begun, the dream of a "rainbow nation" remains difficult to realise. As a result it is difficult to impart advice on how to interact with 'South Africans' due to there being no real representative of a true 'South African' other than a member of the white Afrikaner, black African, Indian, Cape-Malay and other communities. To add to the complexity there are also marked differences between rural and urban dwellers. Speaking on general terms those in rural areas are seen as outgoing yet conservative while those in the cities are more flexible in thought but often more concerned with material wealth. In addition to the multiple cultures there are also numerous languages spoken in the country. The government officially recognizes 11 languages: Afrikaans, English, Ndebele, Pedi, Shangaan, Sotho, Tsona, Tswana, Venda, Xhosa and Zulu. However the foreign visitor need not worry as English is the language of commerce. Meeting & Greeting There are as many ways of greeting one another as there are cultural groups in South Africa. However, when dealing with foreigners the default approach is to shake hands. Some women may not shake hands and merely nod their head. A simple nod back accompanied with a smile is all that is needed. People are, on the whole, fairly relaxed and informal in the business environment; when meeting people it is considered good form to engage in some personal dialogue based around one another's health, family, leisure time or sport. Getting straight down to business and rushing through these social niceties marks you as illmannered and may cause you to be perceived as uninterested. Business cards are normal practice but little ceremony surrounds their exchange. The usual rules apply, i.e. treat the card with respect and store away properly rather than in a pocket. A short comment on the card is also polite. Communication Generally speaking the South Africans are direct (and often loud) communicators but they are also very aware of what, how and to whom something is being said. People will be conscious of what may or may not make someone uncomfortable. The communication style is very much dependent on the level of a relationship; the closer people are the more comfortable they will be with speaking openly and honestly. Relationships in their infancy require more tact and diplomacy. Although South Africa is a transactional culture, meaning they do not require a history with people in order to do business with them, they are a personable people that have deeply routed traditions. This means it if often a good idea to try and build a rapport as well as furnish counterparts with some background information about oneself or company. South Africans follow the European approach to personal space, meaning people keep their distance when speaking. Unlike Latin or Arab cultures they do not appreciate touching and the like. 26. Doing Business in Thailand: A foreign investor looking at a project or transaction in Thailand for the first time will find a legal framework and administrative practices, which satisfactorily govern most business transactions. The role of the law, lawyers and the judiciary in Thailand has been long established. It is a system within which most foreign and local investors can operate comfortably with a high degree of confidence in consistent interpretation and enforcement of the law. The modern Thai legal system is long established, dating from the reign of King Chulalongkorn in 1868. The Ministry of Justice was established in 1892. The Thai Bar Association was established in 1914. Its members presently number over 79,000 and include judges, prosecutors, practicing lawyers, professors, and others. There is an independent judiciary that provides a forum for the fair settlement of disputes. A high status is attached to being a judge, and the examinations to enter the judiciary are very difficult. The judiciary jealously guards its independence. Government agencies may be sued in the courts and cannot raise a defense of sovereign immunity. However, state property is not subject to execution. There is a Thai civil service that administers laws and regulations with a high degree of consistency, and is largely free from political influences. Few, if any, decisions in a normal business transaction or investment project require going above the civil service for a political decision. There are four basic codes: Civil and Commercial Code, Criminal Code, Civil Procedure Code, and Criminal Procedure Code. In adopting these codes early in the last century, Thailand selected features from the two western legal systems (common law and civil law adapting them to the circumstances in Thailand. Decisions and rulings of the judiciary and civil service are not binding but have considerable force as precedents. In addition, there are the Land Code, the Revenue Code and hundreds of special laws and regulations governing most areas of commercial activity, many of them drafted and implemented with the assistance of international legal advisors. The legal and accounting professions are regulated under professional licensing systems, which encourage high standards of service. Although Thai is the language of the courts, most contracts between private parties may be executed in English or other foreign languages, and may be governed by foreign law. 27. Doing Business in UK: The United Kingdom (UK) is comprised of four countries: England, Scotland, Wales, and Northern Ireland. It is important not only to be aware of these geographical distinctions but also the strong sense of identity and nationalism felt by the populations of these four countries. The terms 'English' and 'British' are not interchangeable. 'British' denotes someone who is from England, Scotland, Wales or Northern Ireland. 'English' refers to people from England. People from Scotland are referred to as 'Scots'. People from England are not likely to take offence at being called “English”, whereas a Welsh, Scots, or Northern Irish person will. Cultural Diversity Formerly a very homogenous society, since World War II, Britain has become increasingly diverse as it has accommodated large immigrant populations. The mixture of ethnic groups and cultures make it difficult to define British as looking or acting in one particular manner. People may sound British and retain the cultural heritage of their forefathers while others may become more British than someone who can trace his/her lineage to the 5th century. The fact that the nation‟s favourite dish is now a curry sums up the cultural mish-mash that is modern day Britain. 28. Doing business in the UK The British are rather formal. Many from the older generation still prefer to work with people and companies they know or who are known to their associates. Younger businesspeople do not need long-standing personal relationships before they do business with people and do not require an intermediary to make business introductions. Nonetheless, networking and relationship building are often key to long-term business success. Rank is respected and businesspeople prefer to deal with people at their level. If at all possible, include an elder statesman on your team as he/she will present the aura of authority that is necessary to good business relationships in many companies. British communication styles The British have an interesting mix of communication styles encompassing both understatement and direct communication. Many older businesspeople or those from the 'upper class' rely heavily upon formal use of established protocol. Most British are masters of understatement and do not use effusive language. If anything, they have a marked tendency to qualify their statements with such as 'perhaps' or 'it could be'. When communicating with people they see as equal to themselves in rank or class, the British are direct, but modest. If communicating with someone they know well, their style may be more informal, although they will still be reserved. Business meetings Punctuality is a very British trait. It is especially important in business situations. In most cases, the people you are meeting will be on time. Always call if you will be even 5 minutes later than agreed. If you are kept waiting a few minutes, do not make an issue of it. How meetings are conducted is often determined by the composition of people attending. If everyone is at the same level, there is generally a free flow of ideas and opinions. If there is a senior ranking person in the room, that person will do most of the speaking. In general, meetings will be rather formal and always have a clearly defined purpose, which may include an agenda. There will be a brief amount of small talk before getting down to the business at hand. If you make a presentation, avoid making exaggerated claims. Make certain your presentation and any materials provided appear professional and well thought out. Be prepared to back up your claims with facts and figures. The British rely on facts, rather than emotions, to make decisions. Maintain eye contact and a few feet of personal space. After a meeting, send a letter summarising what was decided and the next steps to be taken. Business Dress * Business attire is conservative. * Men should wear a dark coloured, conservative business suit. * Women should wear either a business suit or a conservative dress. Greetings * Shake hands with everyone at a meeting upon arrival. * Maintain eye contact during the greeting. Titles * Only medical doctors and the clergy use their professional or academic titles in business. * Most people use the courtesy titles or Mr, Mrs or Miss and their surname. (Mr and Mrs are words in the United Kingdom and do not require a period after them as they are not abbreviations.) * If someone has been knighted, they are called 'Sir' followed by their first and surnames or 'Sir' followed simply by their first name. * Wait until invited before moving to a first-name basis. People under the age of 35 may make this move more rapidly than older British. Business Cards * Business cards are exchanged at the initial introduction without formal ritual. 6. Explain the matrix structure with advantages and disadvantages. Matrix Structure is defined as a type of management system where professionals with a variety expertise are brought together to work on a projects. They report to a number of managers of different projects. The idea is to share knowledge and personnel to maximize effectiveness. Matrix structure can further be defined as a form of organization structure based on horizontal and vertical relationships. The matrix structure is linked closely to matrix management, and is related to project management. It emerged on an improvised rather than a planned basis as a way of showing how people work with or report to others in their organization, project, geographic region, process, or team. Matrix structures are more likely than other structures to exist on a temporary or ad hoc basis. Indeed, some scholars group matrix structures under a broader category of organizational forms called "adhocracies," or temporary work configurations, created to deal with a particular problem or project. Large-scale use of adhocracies dates to U.S. military practices during World War II, when the war effort required flexible teams of experts to be convened on short notice and delegated certain tasks, often without a great deal of micromanagement by military brass. Once the objectives were reached, the team would be disbanded and the members reassigned to other duties. A similar rationale and process exist in the business world, and thus many formal matrix structures fall into the ad hoc category. Permanent matrix structures are centered on more enduring aspects of business operations, such as product lines or processes. A common practice is to have a product or brand manager who is responsible for overseeing the development and production of an ongoing product, but staff who work on the product may also contribute to other products from time to time. This permanent set-up creates accountability, coordination, and perhaps most of all, continuity for the product as a whole, while enabling staff, who generally have a direct supervisor who is not a product manager, to be flexibly assigned where they are needed most. Matrix structure groups employees by both function and product. An example would be a company that produces two products: product A and product B. Using the matrix structure, this company would organize functional departments for both products, i.e. product A marketing department, product A accounting department, product A R&D department and product B marketing department, product B accounting department, product B R&D department. At the same time both product B and product A departments are subordinated to the top executives of the company. So, dual reporting lines are clearly observed in matrix structure. Illustration of Matrix Structure: Advantages: The cardinal advantage of a matrix structure is that it facilitates rapid response to change in two or more environments. For instance, a telecommunications company might be extremely concerned about both unforeseen geographic opportunities and limited capital. By departmentalizing its company with the financial function on one axis and the geographic areas on the other, it might benefit from having each of its geographic units intertwined with its finance department. For example, suppose that an opportunity to purchase the cellular telephone rights for a specific area arose. The matrix structure would allow the company to quickly determine if it had the capital necessary to purchase the license and develop the area, or if it should take advantage of an opportunity in another region. Matrix structures are flatter and more responsive than other types of structures because they permit more efficient exchanges of information. Because people from different departments are cooperating so closely, they are eager to share data that will help them achieve common goals. In effect, the entire organization becomes an information web; data is channeled both vertically and horizontally as people exchange technical knowledge, marketing data, product ideas, financial information to make decisions. In addition to speed and flexibility, matrix organization may result in a more efficient use of resources than other organic structures. This occurs because highly specialized employees and equipment are shared by departments. For example, if the expertise of a computer programmer is needed in another department, he or she can move to that department to solve its problems, rather than languishing on tasks of low priority as might happen in a non matrix setting. Other benefits of matrix management include improved motivation and more adept managers. Improved motivation results from decision-making within groups becoming more democratic and participatory because each member brings specialized knowledge to the table—and since employees have a direct impact on day-to-day decisions, they are more likely to experience higher levels of motivation and commitment to the goals of the departments to which they belong. More adept management is the result of top decision makers becoming more involved in, and thus better informed about, the day-to-day operations of the company. This involvement can also lead to improved long-term planning. Disadvantages: Despite their many theoretical advantages, matrix management structures have been criticized as having a number of weaknesses. For instance, they are typically expensive to maintain, partly because of more complex reporting requirements. In addition, many workers become disturbed by the lack of a chain of command and a seeming inability to perceive who is in charge. Indeed, among the most common criticisms of matrix management is that it results in role ambiguity and conflict. For instance, a functional manager may tell a subordinate one thing, and then a product/project boss will tell him or her something different. As a result, companies that change from a comparatively bureaucratic structure to matrix management often experience high turnover and worker dissatisfaction. Supporting critics' derision of matrix management are several examples of companies that have implemented and later abandoned matrix structures. For example, one study showed that between 1961 and 1978 about one-quarter of all teaching hospitals in the United States moved to unit or matrix management structures. By the late 1970s, though, nearly one-third of those hospitals had rejected the concept, citing reasons such as high costs, excessive turnover, and interpersonal conflict. Although the hospital study suggested that matrix management was better suited to larger organizations, General Motors Corp.'s experience indicated otherwise. After a seven-year test of a matrix structure, GM jettisoned matrix management in the 1980s in favor of a more traditional, product oriented organizational structure. It cited managers' lack of control over incentives as a primary shortcoming of the matrix system. Although matrix management was often viewed during the 1970s as a cure-all for organizational design, the perceived breadth of its potential for application has gradually diminished. In general, matrix structures are assumed to be most appropriate for larger corporations that operate in unique or fast-paced environments; a coal-mining company, for example, might be less likely to benefit from a matrix structure than would a pharmaceutical company. Matrix management also works best for organizations that are managed and staffed mostly by professionals or semi-professionals, e.g., engineers and scientists. Matrix management further requires a workforce that has a diverse set of skills and employees that have strong interpersonal abilities. Finally, matrix management is usually more effective when a project manager, who is technically working under the authority of a product and a functional boss, is given the authority to make critical decisions. Because of their limitations, matrix management structures frequently are integrated into an organization as one facet of a larger plan. For example, a research team organized to develop a new product might be placed in a division of the company that is set up as a matrix. After the initial stages of the project are completed, the ongoing management of the product might be moved to a division of the company that reflects a more conventional functional or product/project structure. Indeed, as evidenced by NASA's successes in the 1960s, matrix management is particularly effective in accomplishing "crash" and high-tech projects, such as those related to medical, energy research, aerospace, defense, and competitive threats.
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